Inputs are frustratingly high this year, and commodity prices are frustratingly low. Even so, net farm income is projected to reach $177 billion in 2025, which is noticeably above totals of $128 billion in 2024. How can that be?
“Our increase in farm income from ’24 to ’25 is largely because we have record beef prices,” says Robert Maltsbarger, senior research economist with the University of Missouri. “On the other hand, we have good supplies and elevated inputs on the crop side that are squeezing margins.”
Another factor that can’t be ignored: Direct government payments to farmers are projected to rise from $10.4 billion in 2024 to $40.5 billion this year. That is largely due to supplemental and ad hoc disaster assistance that was delivered via the American Relief Act of 2025, which compensated for losses incurred over the last two years.
“Those ad hoc payments have really helped us out,” Maltsbarger says. “But in our analysis, we don’t assume additional ad hoc assistance moving forward.”
If these temporary stopgaps don’t continue, ag sector profits could take a hit moving forward, adds Pat Westoff, director of the Food and Agricultural Policy Research Institute.
“As emergency payments dry up and crop prices remain weak, we project a $31 billion decline in farm income next year,” Westoff says.
Further complicating the matter is China’s absence at the buying table for new-crop soybeans, notes Brandon Kern, senior policy director for the Ohio Soybean Association.
“The vast majority of those purchases happen in September, October and November,” he says. “If we go through that critical period with zero purchases with a market that has typically purchased around 25% of our crop, you’re going to see prices slide even further.”
Diverting tariffs
One avenue the Trump administration is exploring is diverting tariff proceeds to offer more aid to farmers through proper congressional channels or existing ag authorities like the Commodity Credit Corporation.
“Farmers appreciate the president’s recognition that the current trade strategy is hitting them hard,” Kern says. “And while farmers would rather have predictable markets, the reality of the current situation is that assistance is necessary.”
Build a 3-tier budget
So, what can individual farmers do to protect themselves in this era of uncertainty? It may be prudent to embrace a three-tier budget system for your operation:
1. Survival budget. This assumes you can cover essential operating expenses, debt service and family living expenses. Strive for minimal maintenance and input costs at this tier.
2. Operational budget. Include everything in the first tier, plus planned improvements or modest expansion efforts. Assume conservative estimates of recurring government programs, such as crop insurance.
3. Growth budget. Include everything in the first two tiers, but also budget for major capital investments or expansion. This budget is only possible with better commodity prices or major government assistance.
Unfortunately, there are no easy answers and no guarantees. But if Uncle Sam can help you cross the finish line, just remember that every penny counts.