Show-Me State Times

The financial outlook for U.S. farmers in 2025 presents a mixed picture, according to the annual agricultural market baseline outlook released by the Food and Agricultural Policy Research Institute at the University of Missouri (FAPRI). While crop producers face challenges with declining crop prices despite a slight drop in input costs, cattle producers are seeing record prices. Uncertainty in trade policy and programs adds further complexity to the economic landscape for agricultural producers.

The report, based on market data from January 2025, including economic forecasts from S&P Global, offers 10-year projections for agricultural and biofuels markets. It serves as a reference for assessing alternative agricultural and food policy scenarios with an expectation of slowing economic growth.

One significant finding in the report is a potential temporary rebound in net farm income in 2025 due to government payments, following two years of decline. However, FAPRI director Pat Westhoff indicates a possible return to declining net farm income in 2026. Westhoff comments, “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.”

The report points to the continued decline in crop returns as a factor in the farm income squeeze. Combined returns for major U.S. crops like corn, soybeans, wheat, and cotton are projected to drop significantly in the 2025-26 marketing year compared to 2021-22 levels. Bob Maltsbarger, FAPRI research economist, notes, “After the peak in the 2021-22 marketing year, crop returns have steadily declined. At the same time, production expenses remain elevated, and fixed expenses like land and machinery continue to tighten margins.”

The report also identifies other market trends, such as a surge in cattle prices, expected to reach record levels in 2025, and growth in pork and poultry production. Demand for vegetable oil has risen with the growth in renewable diesel production, while avian influenza has caused egg price volatility. Higher meat and egg prices are projected to contribute to a 2.6% increase in consumer food prices in 2025.

FAPRI co-director Julian Binfield suggests that changes in agricultural markets and policy are akin to new brushstrokes, adding complexity to the scenario: “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 explained. He acknowledges the ongoing uncertainty but highlights the report’s usefulness for evaluating future agricultural market scenarios.

The annual report provides a comprehensive summary of 10-year projections for various economic indicators, including farm income, farm program spending, and domestic commodity markets. FAPRI is a recognized program within the College of Agriculture, Food and Natural Resources focused on highlighting the impact of current events on agricultural market trends.

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