The USDA projects farm sector profits to increase sharply in 2025 after declining the previous year, but an ag economist thinks economic aid and disaster assistance are disguising market conditions.

“You have to look deeper,” said Jennifer Ifft, Flinchbaugh Agricultural Policy Chair at Kansas State University.

The USDA Economic Research Service released its farm income forecast in early February.

Net farm income, a broad measure of profits, is predicted to hit $180.1 billion, up 29.5% or 26.4% when adjusted for inflation.

That followed an estimate of $139.1 billion for 2024, down 5.6% from 2023.

Government payments

Ifft said on a social media post that she saw a headline about U.S. farm income being the second highest of all-time.

“It’s true, but income seems very high in large part due to government payments. Notably, these ad hoc payments compensate producers for 2023 and 2024 losses,” Ifft added.

Direct government payments are forecast to surge 355% from the previous year to $42.4 billion in 2025. The increase is expected because of supplemental and ad hoc disaster assistance to farmers and ranchers from the American Relief Act of 2025.

Commodity sales down

Meanwhile, cash receipts from commodity sales are expected to decrease 0.3% to $515 billion.

“This year, especially — and it was true last year, too — you have to look at crops and livestock differently,” Ifft said, in an interview.

Total crop receipts are expected to drop 2.3% from 2024, led by lower receipts for soybeans and corn.

Inflation-adjusted net cash farm income levels for corn and soybean farm businesses are at their lowest since 2010. Wheat is also very low, Ifft said.

“That’s even with these 2025 payments. It’s a pretty tough time for a lot of crop farms right now,” she added.

Ifft, who used to work at the USDA Economic Research Service, said there’s been an increasing debt trend for crop farms over the past two decades, as well.

Total animal and animal product receipts are expected to rise 1.4%.

Dairy, poultry and cattle farm businesses should see substantially higher net cash income than the inflation-adjusted 2010-24 average, Ifft said.

Farm business income

The average net cash farm income for farm businesses is expected to increase 11.4% from 2024 to $129,000 per farm.

Farm businesses are farms with annual gross cash farm income — annual income before expenses — of at least $350,000. Operations with less than $350,000 in annual income but that report farming as the operator’s primary occupation also are included.

Every region in the U.S. is expected to see increases, with businesses specializing in animal and animal products forecast for increases, and the outlook for growers mixed, according to the USDA.