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U.S. Farm Income Down $9 Billion This Year; Expenses Up $5 billion

• October 7, 2026
• Ed Gresser

U.S. farm income down $9 billion this year; expenses up $5 billion

THE NUMBERS:  Farm bankruptcies* –

* National Center for Agricultural Law. They count 208 farm bankruptcies from January to June 2026.

WHAT THEY MEAN:

The National Agricultural Law Center’s sad tally finds farm bankruptcies up 45% in 2025, and (through June) another 11% this year: 25 farm failures in California, 17 in Arkansas, 14 in Indiana, 12 in Texas, and so forth. Data from the Department of Agriculture’s Economic Research Service glumly explains:

“Inflation-adjusted NFI [“Net Farm Income” = total farm income minus total farm expenses] is expected to decrease by 5.5 percent from 2025 to $158.4 billion in 2026. Farm production expenses are projected to remain comparable to the 2025 level, increasing by $7.1 billion (1.5 percent) in 2026, after adjusting for inflation.

In sum, per ERS, after adjustments for inflation, America’s 1.9 million farms will cost $7 billion more to run this year than in 2025, and their 3.4 million operators will earn about $9 billion less.

What’s happened? Farm incomes and costs often vary for reasons that are hard to change and sometimes beyond human control: weather patterns, production booms overseas, that sort of thing. This year’s rural stress is different: U.S. government decisions in 2025 and 2026 simultaneously raised farm costs and diminished farmers’ income. Three points:

Direct tariff costs: Since February 2025, Trump administration tariff increases have been raising costs. The Commerce Department’s list of “national security” tariffs has shifted and changed over the past year, but currently puts new tariffs of 15% on plows and harvesters, 25% on “screws and bolts,” 10% on wood, and 50% on “barbed wire of a kind used for fencing.” The White House’s “IEEPA” tariffs of last year, and their recent “forced labor law” replacement, put tariffs ranging from 10% to 30% on hoes, tools, irrigation equipment, pesticides, and lots of other supplies. So fencing, repairs, harvesting and irrigation, weeding and spraying for bugs, etc., all cost more. This, in turn, as Creighton University’s September “Rural Mainstreet Index” survey of rural bankers in 10 western and midwest states concludes, brings under-investment in equipment:

    “The 2026 conflict in Iran and tariffs on imported steel/aluminum have created even more volatility and reluctance among farmers and ranchers to purchase new farm equipment.”

War costs: Meanwhile, this year’s war with Iran has pushed fertilizer prices up about 20% as compared with the rates as of January 2025, and diesel fuel prices — diesel runs tractors, harvesters, irrigation equipment, trucking — from $3.70/gallon to $6.35/gallon. That means about $4,000 a year in extra production costs per farm, and pressure on family budgets as well: Federal Reserve Governor Lisa Cook notes that about a quarter of rural household expenses are transport costs.

Lost export income: Meanwhile, countries on the receiving end of tariffs sometimes hit back. The U.S. is the world’s top agricultural exporter – per the WTO, American farms and ranches sell about 11% of the world’s $2.4 trillion in worldwide exports, second only to the 27 combined EU countries — and relies on sales to foreign customers for about 20% of farm receipts. Last year’s totals range from 156 tons of California grapes shipped to sunny Fiji in the South Pacific, through $10,000 worth of biscuits to the stormy Faroe Islands, and 159 tons of sorghum to Eritrea on the Red Sea. Three countries in particular — China, Canada, and Mexico — usually account for half of U.S. annual farm exports. A top-six list as of 2024 puts this in context:

China and Canada have been particular tariff targets, and both — China in particular — have hit back. The $24 billion in exports in 2024 to China fell to $8 billion last year: soybean sales down from $12.6 billion to $3.0 billion, wheat $440 million to $16 million, beef $1.6 billion to $0.5 billion, pistachio nuts $842 million to $33 million. This year’s tariff ‘truce’ has added back about $2 billion, but remains far below earlier years. Most sales to Canada (the second-largest U.S. farm customer, and top for fresh fruit and vegetables, eggs, wine, and juices) held up through the summer. Not all, though: the fresh produce export total dropped by 10% ($400 million), and wines, beer, and liquor by two-thirds. As to the rest, the Canadian government is pretty actively trying to find new sources, and will likely do so unless Congress reverses the Trump administration’s mystifying lurch into a northern border “trade war.”

So: Income down, operating costs up, and a $19.5 billion jump in emergency aid only partially closing the gap. That can’t go on indefinitely. In the extreme cases, as the Agricultural Law Center’s bankruptcy tallies suggest, it stops pretty suddenly.

FURTHER READING

PPI’s four principles for response to tariffs and economic isolationism:

• Defend the Constitution and oppose rule by decree;
• Connect tariff policy to growth, work, prices and family budgets, and living standards;
• Stand by America’s neighbors and allies;
• Offer a positive alternative

The National Center for Agricultural Law charts an ominous rise in farm bankruptcies.

Farm Bureau perspective, hoping a “trade truce” with China will restore lost markets.

Federal Reserve Board Governor Lisa Cook assesses the rural economy.

Creighton University surveys rural bankers on regional economic trends.

And the Sacramento Bee on Del Monte’s Maryville peach cannery and the impact of its collapse.

Data:

USDA’s Economic Research Service reports on farm income and wealth.

ERS on export shares of production and receipts.

USDA’s “Global Agricultural Trade System” database. A more complete breakout, with the top six export markets and other world regions as of 2024:

And the WTO’s merchandise trade stats dashboard, with goods trade totals as well as agriculture, manufacturing, and natural resources specifically.

Tariff lists:

Commerce Department’s most recent list of “national security” products related to metals — horseshoes, coat hangers, barbed wire, rivets, non-ag tractors, etc.

And the U.S. Trade Representative Office’s “forced labor law” tariffs.
Big picture:

The most recent comprehensive National Census of Agriculture from USDA (out in 2024, with data for 2022).

And a one-page summary of farmland, operators, and crops reports 3.4 million “producers” on 1.9 million farms and ranches, covering 880 million acres of land. Long-term context for this suggests the very high productivity and technical sophistication of American agriculture, with more food produced by fewer people on less land over time:

• The total number of farms peaked in 1935 at 6.5 million, dropped fast to about 3 million by 1950 after the adoption of mechanized tractors and harvesters, and has been slowly trending down since.
• Land area under cultivation is also a bit down, though less dramatically, from 924 million acres in 1926 to 1.02 billion acres in 1976.
• The count of farm operators and hired workers is very sharply down, from a combined 11 million in 1926 to about 5.5 million in 1976, and now about 4.7 million.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

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