As 2026 begins, the latest Ag Economists' Monthly Monitor shows that while the U.S. farm economy is no longer declining, it's far from rebounding. Economists describe the outlook as stabilizing but strained, particularly in the row crop sector, where three straight years of breakeven or negative returns continue to weigh heavily.

The December data shows 54% of economists believe the farm economy is slightly better than a month ago, but 42% say it's worse than a year ago, and only 38% expect improvement over the next year. Former USDA Chief Economist Seth Meyer, now at FAPRI, said sustained tight margins require more than price stability-they require demand growth.

How would you rate the financial health of the following ag sectors today?

Crop producers are squeezed by high input costs, oversupply, and weak commodity prices, while policy uncertainty-especially around biofuels, E15, and trade-adds pressure. Despite $11 billion in Farmer Bridge Program payments, economists say most funds will go toward short-term debt, not long-term investment.

Consolidation remains a concern. 83% of economists say row crops are in a financial recession, and 92% say consolidation is accelerating, driven by rising costs, aging operators, and operational stress. Livestock, however, continues to perform well. Beef in particular is rated above average or excellent, supported by strong domestic demand and tight supply. Pork and dairy are more stable, though dairy faces headwinds from beef-on-dairy dynamics.

Since mid-2025, ag economists see stabilization rather than recovery

Input costs are the top concern going into 2026, cited by nearly 70% of respondents. While interest rates, land rents, and global supply play roles, input prices are the largest hurdle to profitability. South American production, especially in Brazil, and trade with China are seen as critical to shaping crop prices in the next six months.

Biofuels policy emerges as a key lever. Final rules on RFS volumes, 45Z tax credits, and year-round E15 could meaningfully impact corn and soybean demand. Meyer highlights that EPA decisions on small refinery exemptions and imported feedstocks under 45Z could help absorb surplus supply. "These policy tools could move the needle," he said.

Which commodity do you expect to face the greatest financial challenges in 2026?

Despite market stress, economists do not expect dramatic acreage shifts. Projections suggest:

• Corn: 93-95 million acres

• Soybeans: 84-86 million acres

• Wheat: 44-45 million acres

• Cotton: 9-10 million acres

Crop profitability hinges on whether global demand materializes and if U.S. policy offers clarity. In contrast, livestock and protein markets remain supported by consumer demand and export strength. However, supply-side issues-like herd rebuilding and disease risk-could introduce volatility.

Overall, the ag economy is holding ground but remains fragile. Government aid is buying time, but economists stress that biofuels policy, trade agreements, and input relief are essential to enable a real recovery.