USDA’s latest forecast projects a sharp rebound in farm profitability for 2025, though much of the improvement is tied to government disaster assistance rather than market-driven strength.
American Farm Bureau Federation (AFBF) economists Bernt Nelson and Faith Parum caution that the forecast offers a mixed picture for agriculture.
“While stronger performance in some sectors is a factor in the increase, much of it is tied to continued support from government disaster assistance,” they explained in their Market Intel report.
According to USDA’s September 2025 net farm income forecast, net farm income is expected to reach $179.8 billion, up 40.7% from $127.8 billion in 2024. The September release revises USDA’s February 2025 forecast slightly downward, trimming $300 million from earlier estimates. In addition, the agency lowered its 2024 net farm income estimate from $139.1 billion to $127.8 billion—an 8.1% decline—due to weaker crop receipts, crop inventories and livestock receipts, paired with higher production expenses.
After adjusting for inflation, USDA projects farm income to rise 37.2% from 2024 to 2025, while net cash farm income is expected to increase 25.3%, or $36.5 billion, over the same period.
Livestock drive gains
AFBF noted that livestock and animal product sales are projected to reach record levels in 2025. Total receipts are forecast to be $298.6 billion, representing an 11.2% increase from 2024.
Cattle and calves are the most significant drivers, with cash receipts expected to climb 16%, or $17.6 billion, to $129.7 billion—a record high. Hog receipts are projected to rise by 9.5%, while poultry, eggs and other animal products also show growth.
Milk is the exception, with receipts expected to decline by $500 million, or 1%, to $50.2 billion. Still, the overall livestock picture is strong.
“Receipts for all major animal/animal products are expected to grow mostly from higher prices,” USDA noted.
Crops under pressure
While livestock markets are expected to buoy 2025 returns, crop producers face steep headwinds. USDA projects crop cash receipts will fall $6.1 billion, or 2.5%, from $242.7 billion in 2024 to $236.6 billion in 2025. The agency also lowered its February crop cash receipts projection by $17 billion, signaling weaker-than-expected markets.
“If realized, this would be the lowest cash receipts for crop sales since 2007,” the report stated. Corn receipts are forecast to fall by $2.3 billion, or 3.7%, while soybean receipts are projected to drop by $3.4 billion, or 7.2%. Hay receipts are expected to slip slightly due to larger supplies.
These declines underscore the uneven farm economy. As Nelson and Parum wrote, “When paired with lower cash receipts for crops, elevated production expenses paint a picture of the obstacles facing the country’s row crop farmers.”
Expenses and assistance
Even as revenues improve, expenses continue to climb. Production costs are forecast to reach $467.5 billion in 2025, up nearly $12 billion from 2024. The biggest increase comes from livestock and poultry purchases, driven by record cattle prices, which are expected to add $10.6 billion in costs.
When adjusted for inflation, USDA’s expense projection is comparable to 2024, but the pressure remains. Labor, taxes and input costs continue to weigh heavily on producers, particularly those facing lower crop revenues.
Debt remains a mounting concern. The report showed that total farm sector debt is expected to rise 5% to $591.82 billion in 2025, nearly 20% higher than in 2022 when the Federal Reserve began raising interest rates.
Interest expenses to service farm debt are forecast at $33.09 billion, up $1.6 billion from 2024 and 16% higher than in 2022. According to AFBF, these increases make it more difficult for farmers to manage capital-intensive operations, particularly when paired with declining crop receipts.
The most striking element of the forecast is the role of government support. Direct government payments are projected at $40.5 billion in 2025, more than 301% higher than the $10.9 billion provided in 2024. Much of this aid is supplemental disaster assistance to offset losses from 2023 and 2024.
Nelson and Parum stress that while these payments bolster short-term finances, they are not a substitute for strong markets. “Much of the forecasted $41 billion rebound in net farm income is therefore the result of policy-driven support rather than strength in commodity markets,” they wrote, adding that this signals “the recovery is supported by temporary relief rather than sustained improvements.”
The report summarizes that USDA’s September 2025 forecast projects net farm income at $179.8 billion, slightly below February’s projection but sharply higher than 2024 levels. Livestock markets, especially cattle, are expected to generate record revenues, but crop producers are facing declines not seen since 2007.
While stronger livestock markets provide critical support, Nelson and Parum cautioned that “continued reliance on government aid reacting to prior years underscores the fragility of farm finances that are being degraded by rising farm debt and interest expenses.” They warned that “without sustained, market-driven growth, the rebound in net farm income will be difficult to maintain, leaving many producers vulnerable to future price shifts, expense pressures and policy changes.” — Charles Wallace, WLJ contributing editor
