The year 2025 is seeing one of the highest spikes ever in both United States and Kansas net farm incomes. That’s mostly thanks to a combination of insurance payouts, high ad hoc government payments and high cattle prices.
Grain crop prices and profit margins remain in the doldrums. Input costs, while declining slightly over the past couple of years, are still high. When government payments are removed from the picture, the outlook is much more sobering and in line with long-term trends.
Those were the main conclusions of a June 17 webinar on Kansas farm incomes presented by a team of veteran Kansas State University farm economists. The webinar was prepared in collaboration with the Rural and Farm Finance Policy Analysis Center, part of the Division of Applied Social Sciences at the University of Missouri-Columbia, which is funded directly by Congress.
National net farm incomes
Alejandro Plastina, director of the RaFF, began with an overview of national net farm incomes. He remarked that the outlook shows “short and medium-term pain” for field crops, and that farmers are being kept afloat by “sizable ad hoc government payments” in 2025. Ad hoc payments are outside of farm bill support programs, require only executive action and are one-time payments made in response to adverse market or weather events.
They include Market Facilitation Program made during the U.S.-China trade war, Coronavirus Food Assistance Program during the COVID-19 pandemic, and supplemental disaster payments to compensate producers for damage from droughts, hurricanes, derecho winds or wildfires. Some of the payments that are raising farm incomes in 2025 were authorized in 2024 by the Biden administration; others were provided by the Trump administration to ease fallout from his tariff policies.
According to the Food and Policy Research Institute at the University of Missouri, while the ad hoc payments are spiking net farm income in 2025, the policy outlook remains very uncertain. Plastina noted that U.S. cash receipts for nearly all crops were down in 2025. While crop input costs like fertilizer and pesticides are slightly down from the highs of the last few years, they still remain relatively high and “sticky.”
Cattle prices are up, and the cattle markets are a bright spot in the ag horizon. But that also means that costs of purchased livestock have increased for producers.
Total U.S. net farm income was estimated at $179.64 billion in 2025, but is projected to fall to about $139.01 billion the following year, assuming no ad hoc payments.
Kansas net farm incomes
Jennifer Ifft, Flinchbaugh Agricultural Policy Chair at K-State, provided a deeper dive into Kansas net farm incomes. A $2 billion increase in government and insurance payments in 2024-25 is driving the “largest spike in several years” in NFI that could be the second highest on record. Some of those payments are from the American Relief Act of 2024 that are coming through the pipeline now; others are from the Emergency Commodity Assistance Program.
Net farm income has also been boosted by yield improvements as the drought ends throughout most of Kansas. If ARA-authorized payments are removed from the timeline, net farm incomes for 2024, 2025 and 2026 remain comparable, she said.
Livestock receipts, however, are “well above historic levels,” having increased by $5 billion since 2020. Cattle inventories are low, which keeps prices high. Crop acres have slipped a bit, along with a steady decline in hay acres, she said. The acreage declines may reflect changes in drought and weather.
Livestock producers are seeing feed costs drop. Fertilizer costs in 2025 remain about 28% above the 30-year historical average. Pesticide costs are 30% higher, and seed costs are 13% higher, while crop receipts are below the 30-year average. Only fuel and oil costs remain right on the average.
“This results in a squeeze on profit margins,” Ifft said. The outlook suggests a $2 billion drop in farm income for 2026, absent more ad hoc payments.
Modeling individual farm income
Gregg Ibendahl, associate professor in agricultural economics at K-State, provided a more granular deep dive using Kansas Farm Management Association reports and allocating data from the state level to a model of a single farm. He explained the advantages and disadvantages of this procedure, which averages data from 762 farms in the KFMA reporting system that provide at least three years’ worth of data. Income and expenses are fully estimated, and state grain prices from National Agricultural Statistics Service are used.
Ibendahl’s model didn’t yet include 2025 ad hoc payments, so “my numbers will look worse” for 2025 than they really are, he said. He came up with an estimated average single-farm NFI of $190,599 for 2022, falling to $109,079 for 2023, $92,015 for 2024, and only $25,982 for 2025.
“I will adjust these numbers once government payouts are added back in,” he said. He said crop insurance revenues were down by about $35,000 per farm. Overall expenses were about the same as last year’s. His model factored in a good wheat crop.
Ibendahl then showed charts and graphs breaking down net farm income by region, and “the trend is bleak,” he said, especially in the western half of Kansas. The bottom 25% of farms earn close to zero net income—but Ibendahl noted that “it’s not the same 25% every year.”
Over the next two or three years, he said, cattle farms are expected to out earn grain farms, which is “kind of unusual.” Half of all farms will have negative farm income without ad hoc payments in 2025.
However, when their incomes are averaged over a 10-year period, “most farms are doing OK,” with median net farm income over a 10-year period of about $75,000 per year. “Balance sheets are strong,” with rising land values contributing to higher equity and a healthier-deb-to-asset ratio. However, debt is a trailing indicator and debt per crop-acre has steadily increased, which could mean trouble if farm loan interest rates go up.
The full webinar may be viewed at https://agmanager.info/events/farm-income-webinars.
David Murray can be reached at [email protected].
