What if we had a strategic plan for growing U.S. agriculture’s profitability?
In case you haven’t noticed, things aren’t going too well for many farmers and ranchers.
Of course, the cow-calf operators are happy, as well as dairy guys who are selling cattle. Those are some bright spots in a farm economy that’s otherwise mostly in the tank.
If you look at the U.S. Department of Agriculture’s first farm income forecast for the year in early February, it’s a little scary—primarily because of the strong reliance on government payments.
The agency says a whopping number of government payments, a strong cattle sector, and off-farm income should keep farm earnings relatively stable in 2026—despite no expected improvement in revenue from crops.
The combination of ad hoc assistance and changes made to commodity programs by the GOP’s One Big Beautiful Bill Act will combine to shore up farm income. Direct government payments to farmers are expected to soar to $44.3 billion this year, a $13.8 billion increase from 2025.
Cash receipts from crops are expected to rise slightly to $240.8 billion, an increase of $2.8 billion not adjusted for inflation. Sales from corn and hay are expected to be higher, while receipts for wheat and rice fell, and soybean and cotton sales remain relatively stable.
Rice continues to be one of the toughest sectors to be in. Rice receipts are forecast to drop by $400 million, or 12.5% in 2026.
Despite continued strong cattle prices, cash receipts from livestock and poultry products are expected to fall by 5.8%, to $273.9 billion in 2026, a decrease of $17 billion not adjusted for inflation.
Receipts for cattle and calves are projected to rise 4.1% this year to $5.2 billion on continued increases in cattle prices. But sales from milk are forecast down by 12.8% to $6.2 billion, and receipts from hogs are expected to drop slightly.
Off-farm income will continue to keep farm households afloat this year, according to the forecast.
Input prices easing slightly
At USDA’s recent Ag Outlook Forum, the agency painted a slightly brighter picture.
“For the first time in several years, the cost of production is beginning to moderate,” according to USDA Chief Economist Justin Benavidez. Once adjusted for inflation, the total costs of seed, fertilizer and chemicals are set to fall 0.9%, Benavidez added.
Producers will likely spend a similar amount on labor in the coming year as they did in 2025. Once adjusted for inflation, this represents a slight easing of labor burdens, Benavidez noted.
This is most likely to benefit United States specialty crop producers, Benavidez said, for whom labor costs make up almost half of all expenditures.
Meanwhile prices are set to rise modestly, with USDA anticipating corn, soybeans and wheat all set to rise 10 cents per bushel, Benavidez noted. Cotton, meanwhile, could increase 3 cents per pound, he said.
“The story for the year is progress being made on the price,” Benavidez said. “We’re not hitting it out of the park. We’re not solving everyone’s problems in terms of pricing overnight, but price is generally expected to move modestly higher.”
Brazil rising
Meanwhile, Brazil is surging as an agricultural powerhouse. The South American giant is the world’s leading exporter and top producer of several key agricultural commodities, including soybeans, coffee, sugar, orange juice, beef, and poultry.
We recently sent our Trade Editor Oliver Ward to Brazil to look at comparative advantages in Brazil versus the U.S. He noted that “soybean and corn producers in Matto Grosso face transportation costs well above competitors in the U.S. and Argentina. Exporters pay around $113 per ton to get their product to China, compared to around $85 per ton for Argentinian and U.S. exporters, according to data from the Mato Grosso Institute of Agricultural Economics.
“Those high costs eat into farmers’ bottom lines and hamper competitiveness. Brazilian commodities are already highly competitive in global markets, thanks to cheap land and labor and the ability to plant two, or even three, crops a year. But if the country could resolve its longstanding infrastructure issues, its competitiveness could surge, analysts and industry representatives say.”
That’s why Brazil is working hard to catch up by building new roads, railroads and ports.
While Brazilian and other foreign leaders are plowing investment dollars into their country, the U.S. is struggling to pass a new farm bill that could provide some certainty, at least for a couple of years.
That’s problematic, too, given the razor-thin political margins in the House. As Texas A&M ag economist Joe Outlaw said recently at a crop insurance industry convention: “If you think things are working like a breeze in Washington right now, you’re crazy.”
Time to pivot?
All of these factors are prompting some farm leaders to say it’s time to rethink what we can do to lift up U.S. agriculture in a fashion that is less dependent on government payments and more focused on creating value-added products, manufactured in the U.S. That type of activity is already underway in the dairy industry, where an incredible $11 billion is being invested in new facilities.
Past and former USDA leaders might argue that plans are already in place. Former Secretary Tom Vilsack developed a strategic plan for 2022-2026, and Secretary Brooke Rollins issued a memorandum outlining her priorities at the end of last year.
But some say we need a longer-term comprehensive plan that can get buy-in from politicians from both political parties. They’d like to see a plan that not only addresses research, consumer trends, infrastructure, market opportunities and more, but a timeline that allocates resources to advancing agriculture.
Some of the more ambitious discussions I’ve been part of call for a return to a full-fledge commission, much like Kansas State University ag economist Barry Flinchbaugh chaired back in 2001. The Commission on 21st Century Production Agriculture produced a report, “Directions for Future Farm Policy: The Role of Government in Support of Production Agriculture” that helped pave the way for some important farm policy changes. It seems like it’s time to revisit this type of effort.
Editor’s note: Sara Wyant is publisher of Agri-Pulse Communications, Inc., www.Agri-Pulse.com.
