The USDA's Economic Research Service (ERS) has revised its 2025 farm income outlook, forecasting a drop from February estimates amid a widening gulf between crop and livestock market conditions. Net cash farm income is now projected at $180.7 billion, up 25.3% from 2024 when adjusted for inflation but down from the $193.7 billion forecast earlier this year.

Meanwhile, net farm income-a broader measure including depreciation and inventory changes-is pegged at $179.8 billion, a 37.2% increase over 2024, but slightly below February's estimate.

These elevated income levels are still above the 20-year average, buoyed largely by a flood of federal government payments.

Government Aid Reaches Record Levels

Direct government payments to producers are forecast at $40.5 billion-the largest since 2020 and a $30.4 billion increase over 2024. This surge includes $34.2 billion in ad hoc disaster relief and emergency appropriations passed by Congress last December.

Despite this, USDA economists stress that even without the assistance, farm earnings would rise more than $19 billion, reaching $130 billion in 2025.

Livestock Drives Gains, Crops Lag

The income divergence stems from opposing trends in crop and livestock markets. While total farm cash receipts are expected to increase 4.7%, the crop sector faces steep declines:

• Corn receipts: down 3.7%

• Soybean receipts: down 7.1%

• Wheat receipts: down 9.8%

In contrast, livestock receipts are projected to rise by 11.2%, fueled by:

• Cattle and calves: up 15.7%

• Hogs: up 9.5%

Average net cash income is expected to:

• Drop 14.8% for corn farms

• Drop 13.8% for soybean farms

• Drop 2.1% for wheat operations

• Rise 66.6% for cattle operations

• Rise 26.7% for poultry producers

Input Costs and Financial Indicators Hold Steady

Farm production expenses are projected at $467.4 billion, nearly unchanged from 2024 when adjusted for inflation. Input-specific changes include:

• Labor costs: +4.2%

• Feed, fuel, and pesticides: lower year-over-year

Farm sector equity is projected to increase by 2.1%, reaching $3.8 trillion, while farm debt climbs 2.4% to $600 billion. Debt-to-asset and debt-to-equity ratios remain stable but elevated compared to the 2015-2024 average.

Farm Households and Commercial Incomes Improve Slightly

The median farm household income is set to rise 3.7%, while commercial farms are expected to earn a median farm income of $182,012, up 1.2%. Off-farm income for these operations will average $66,253.

The ERS report does not factor in policy changes from the "One Big Beautiful Bill" enacted in July, which could alter commodity program payments starting in 2026. With Congress debating a new round of emergency aid, further adjustments could emerge by year's end.

For now, the 2025 forecast highlights the continued vulnerability of crop producers, even as livestock operations and government support provide a temporary buffer.