INDIANAPOLIS – Indiana’s net farm income will increase this year, but is expected to drop in 2026, according to a report from Purdue University and the Rural & Farm Finance Policy Analysis Center at the University of Missouri.

This year’s farm income is projected to be $4.71 billion, up 45 percent from 2024, the report said. In 2026, farm income is expected to fall 34 percent to $3.1 billion. The Fall 2025 Farm Income Outlook For Indiana was released in October.

“The expansion of 2025 net farm income is mainly due to increased livestock receipts and direct government payments,” the report said. “Direct government payments are projected to total $891.01 million. This is $773.39 million higher than in 2024, mostly attributed to financial assistance to mitigate the effects of economic- and disaster-related losses in recent years, including 2024.”

Crop receipts in 2025 are projected to decline 6 percent, driven by lower soybean production and lower corn prices, the report noted. Livestock receipts are projected to increase 14 percent, mainly due to higher cash receipts for eggs, hogs and pigs, and turkeys, the report said.

“The decrease in corn receipts is mainly driven by the projected 9 percent drop in average annual corn prices that offset higher production volumes with higher yields,” the report said. Soybean receipts will decline “due to a 6 percent reduction in planted area and a 3 percent drop in soybean production. A 16 percent lower wheat price and 4 percent lower production in 2025 are the main drivers of the drop in cash receipts.”

For livestock cash receipts, eggs are expected to increase 21 percent this year, while hog receipts are expected to go up 17 percent. Dairy receipts are projected to drop 2 percent, and receipts for cattle and calves are expected to increase 1 percent.

“The report correctly identifies government transfer payments for 2025 as a driver of net farm income,” Dr. Todd Davis, Indiana Farm Bureau chief economist, told Farm World. “Some of these payments are included in the 2026 forecast, but at lower levels than in 2025. USDA had discussed a type of liquidity bridge for 2026 before the government shutdown. I am unsure of the likelihood of a bridge payment to help with 2026, but the liquidity concern remains an issue.”

As for 2026, Davis said he’s not surprised that net farm income is forecast to decline.

“The initial 2026 forecast assumes trend yields for corn and soybeans, which are lower than the record yields for the 2025 crops,” he explained. “The 2026 price forecast reflects the September 2025 outlook, which was bearish for 2025 corn and soybeans, and that bearish sentiment carried into 2026.

“The forecast of lower prices for 2026 is reasonable, but weather events in Argentina and Brazil could reduce the size of the crops currently being planted. Smaller South American corn and soybean production would support higher prices for the U.S. crops.”

In 2026, the report said corn receipts are expected to drop 3 percent due to lower production. Soybean receipts are projected to remain steady. Livestock receipts are expected to decline, with egg receipts projected to fall 38 percent. Hog receipts are expected to drop 3 percent, while dairy receipts are projected to increase 2 percent.

“For some corn and soybean farmers, the 2026 crop year could be the third or fourth consecutive year with negative margins,” Davis pointed out. “Farmers have been cutting costs, and this trend will likely continue. However, the easiest cost savings have already been achieved. The harder cost savings involve machinery management, decisions on cash rental rate bids, and finding savings in the farm-family living expense budgets.”

He said farmers should fine-tune their 2026 enterprise and cash flow budgets. They should develop a pre-harvest and post-harvest marketing plan with pricing objectives and quantities priced at each objective. The marketing plan, Davis said, will help farmers manage their decisions without letting bullish emotions or bearish fears drive them.

“The study uses state-level sector analysis which masks the farm-level financial impact,” he said. “For example, a diversified crop/livestock farm is weathering the storm better than a farm only producing row crops. Most farms specialize in a single enterprise, such as corn/soybeans or hogs, rather than being diversified across multiple enterprises. Currently, the crop-only farms are feeling financial stress.

“Young and beginning farmers who rent a larger percentage of their land base to grow their business are under greater stress than those who own a large percentage of their land base. Business growth includes machinery debt as farms increase the field capacity of their machinery. A growing farm may also have a growing family with living expenses that are not easily curbed.”

Similar reports were also prepared for Illinois and Iowa. Illinois net farm income is projected to increase 21 percent to $6.25 billion in 2025, and fall 28 percent next year. In Iowa, net farm income is expected to rise 76 percent to $12.32 billion in 2025. Next year, it is projected to drop 24 percent.

Nationally, net farm income is projected to be $179.85 billion in 2025, up 41 percent, the report said.