April 3, 2025
Contact: Sara Diedrich, 573-882-6217, diedrichs@missouri.edu
The financial outlook for U.S. farmers in 2025 is like a painting with two contrasting scenes. Crop producers, in muted tones, face declining crop prices despite modest reductions in input costs, while cattle producers are colored in vibrant tones amid record prices. Above both, an unpredictable sky looms, symbolizing uncertainty in trade policy and programs that further complicate the economic landscape for agricultural producers.
To help stakeholders navigate this complex scenery, the Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI) recently released its annual agricultural market baseline outlook, providing 10-year projections for agricultural and biofuels markets. The report serves as a point of reference for evaluating alternative agricultural and food policy scenarios, and is based on market information from January 2025, including economic forecasts from S&P Global that indicate slowing growth in the year ahead.
One key finding in the report is the potential for a temporary rebound in net farm income. After two years of decline, net farm income is expected to see an upturn in 2025 due to government payments. However, FAPRI director Pat Westhoff states that the longer-term outlook shows a return to a downward trajectory in 2026.
“Net farm incomes have faced substantial pressure in the last few years, and while one-time government payments are expected to provide some temporary relief in 2025, this brief rebound could give way to declines in later years,” Westhoff said. “Changes in policies or market conditions that result in changes in receipts, government payments or production expenses could significantly impact these figures.”
One driver of the farm income squeeze is the continued decline in crop returns. The report projects that combined returns for four major U.S. crops (corn, soybeans, wheat and upland cotton) in the 2025-26 marketing year will be half of what they were during the 2021-22 marketing year. FAPRI research economist Bob Maltsbarger points out that lower returns and persistent production expenses are tightening margins for crop producers.
“After the peak in the 2021-22 marketing year, crop returns have steadily declined,” Maltsbarger said. “At the same time, production expenses remain elevated, and fixed expenses like land and machinery continue to tighten margins.”
The baseline report also highlights other market trends:
- Cattle prices have increased since lows seen in 2020 and are expected reach a record level in 2025. Pork and poultry production steadily climb with rising productivity.
- Strong growth in renewable diesel production has increased demand for vegetable oil, along with other fats and oils. Changes in policy could significantly shape the outlook in future years.
- Highly pathogenic avian influenza and related flock liquidations pushed egg prices to record levels in February 2025, and continued price volatility is likely.
Consumers continue to feel the effects of market shifts in food price inflation. Despite a slowdown to 2.3% in 2024, rising meat and egg prices are expected to contribute to a projected 2.6% increase in consumer food prices in 2025.
As the painting of the U.S. farm financial outlook continues to evolve, FAPRI co-director Julian Binfield states that changes in agricultural markets and policy shifts are like new brushstrokes, adding complexity and requiring analysis to uncover meaning.
“FAPRI’s baseline report, and other publications, serve as a tool for farmers and policymakers to assess future risks and opportunities in agricultural markets,” Binfield said. “While uncertainty persists, these insights can be used to evaluate the road ahead.”
This annual report offers a summary of 10-year baseline projections for several economic indicators, including farm income, farm program spending and domestic commodity markets. FAPRI, a program of distinction in the College of Agriculture, Food and Natural Resources, develops and publishes baseline reports to highlight the impact of current events on agricultural market trends and projections.
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