Progressive Farmer’s Katie Micik Dehlinger reported Thursday that “USDA forecasts climbing farm income in 2025, but it’s due to a dramatic increase in government payments, not better prices or a higher volume of sales. Net farm income, which is a comprehensive measure of farm profitability, is forecast at $180.1 billion, an increase of $41 billion, or 29.5%, from 2024.”
“Net cash farm income, which is intended to better reflect annual cash flow by excluding inventory changes and depreciation, is forecast at $193.7 billion, an increase of $34.5 billion, or 21.7%, from the previous year,” Dehlinger reported. “USDA tracks many categories in its analysis, including cash receipts, government payments and production expenses, on a per sector basis. It then combines all sector analysis to arrive at its headline numbers.”
“The largest year-over-year change is in the amount of government payments, which are forecast at $42.2 billion, a $33.1-billion increase from 2024. This category includes payments from federal farm programs like the Conservation Reserve Program, Agriculture Risk Coverage, Price Loss Coverage and more. It excluded crop insurance indemnities and USDA loans,” Dehlinger reported. “‘Supplemental and ad hoc disaster assistance payments in 2025 are forecast at $35.7 billion and consist primarily of payments from the Disaster Relief Supplemental Appropriations Act of 2025. The act included the Economic Assistance for Producers and other payments related to losses due to natural disasters in 2023 and 2024,’ the report stated.”
Agri-Pulse’s Philip Brasher reported that “the overall increases in income mask a projected slump in revenue from row crops. Crop cash receipts are estimated to fall 2.3% to $239.6 billion, driven by a $5.8 billion reduction in revenue from corn and soybeans, not adjusted for inflation.”
“But revenue from livestock, poultry and their products are forecast to increase by 1.4%, or $3.8 billion, not adjusted for inflation. Revenue from milk is estimated to increase 2.7%, but revenue from cattle and calves is estimated to fall 0.2%. Cash receipts from hogs and broilers are projected to be higher,” Brasher reported. “ ’When grouped by commodity specialization, farm businesses specializing in animal/animal products are forecast to see higher average net cash farm income in 2025 while the outlook for those specializing in crops is mixed,’ ERS says in its forecast.”
Production Expenses Forecast to Decline
Dehlinger reported that “USDA forecasts production expenses, which include operator dwellings, to decline for the second year in a row. Farmers are expected to spend $450.4 billion in 2025, $2.5 billion less than last year. The largest decline is expected in feed bills, while the largest increase is in the cost of the livestock/poultry purchases.”
“Feed expenses are the largest category of spending and are forecast at $62.4 billion, the lowest level in inflation-adjusted terms since 2007,” Dehlinger reported. “Labor expenses are forecast to be record high in 2025, climbing 3.6% from last year to $53.5 billion. Livestock and poultry purchases are also forecast to set a record at $50.5 billion. That’s a 6.5% increase from 2024.”
“On the crop production side, fertilizer and pesticide costs are forecast to decline. USDA anticipates farmers spending $3.6 billion less on fertilizer, or about $29.2 billion in total,” Dehlinger reported. “Spending on agricultural chemical and application costs are likely to continue a decreasing trend that began in 2022, with USDA forecasting outlays of $18.1 billion, or 6% less than last year. Seed prices are expected to rebound in 2025 after falling in 2024, and USDA said, ‘both the decline in 2024 and the increase in 2025 are largely explained by projected changes in planted acreage.’ Farmers are expected to spend $1.1 billion, or 4.2%, more on seed, totaling $27.7 billion.”
Concerns Remain Moving Forward
AgWeb’s Jim Wiesemeyer reported that “while the increase in government payments has bolstered working capital and improved financial health indicators, concerns persist regarding the long-term sustainability of farm support programs. With farm receipts declining and tariff uncertainties looming, lawmakers may face renewed pressure to reform the farm safety net in future legislation.“
Source : illinois.edu