WEST LAFAYETTE, Ind. – Net farm income (NFI) in the Hoosier state is expected to drop more than $1 billion in 2026 from last year, according to a report released in April in collaboration with Purdue University. In 2027, Indiana’s NFI is projected to drop 16 percent.

Net farm income is projected to be $3.15 billion this year, down from nearly $4.4 billion last year, the report said. The decline is primarily due to a significant reduction in livestock cash receipts (down 21 percent) in 2026, while crop receipts are projected to remain steady, the report noted.

The report was compiled by the University of Missouri’s Rural & Farm Finance Policy Analysis Center (RaFF).

“The expected loss in livestock receipts and higher production costs would be partially offset by a $592 million increase (or 73 percent) in direct government payments, totaling $1.4 billion, primarily from Title 1 commodity and ad hoc programs,” the report explained. “The projected 28 percent decline in Indiana’s NFI is larger than the 1.5 percent projected decrease in U.S. NFI for 2026 by the Food and Agricultural Policy Institute at the University of Missouri.”

Egg prices are projected to fall 61 percent, the RaFF report said. Production expenses are expected to increase 2 percent, mainly due to higher fuel and fertilizer costs stemming from supply chain disruptions, the report said. Crop insurance indemnities are projected to drop 10 percent from last year.

Corn and soybean receipts are each expected to dip 1 percent. Wheat receipts are projected to increase 25 percent. For livestock, cattle and calves receipts are projected to increase 13 percent, while turkey receipts will increase 5 percent. Dairy receipts are expected to fall 11 percent, and hog receipts are projected to remain steady, the report said.

Fuel and oil expenses are expected to jump 28 percent, the report noted, and fertilizer expenses are expected to be up 5 percent.

The RaFF report highlights worsening financial stress for Indiana grain farmers, forecasting further profitability declines this year and next, said Todd Davis, Indiana Farm Bureau chief economist.

“Row crop farmers face ongoing margin squeezes as production costs rise, while cash receipts are expected to hold steady,” he told Farm World. “The report underscores the critical role of farm program safety nets, especially the Price Loss Coverage Title 1 program and ad hoc economic payments. Without these government payments, Indiana grain farmers face even greater financial problems.”

As for any potential bright spots, Davis said that depends on when farmers priced their inputs and on the farm’s cost structure. The state’s grain farmers were already anticipating another year of negative margins unless they achieved yields and prices greater than those assumed in Purdue’s Crop Enterprise Budgets for this year, he said. Those budgets were prepared before the conflict with Iran, which has priced in a risk premium that has increased nitrogen fertilizers and farm diesel prices, Davis pointed out.

“Those farmers who were waiting for lower prices are still waiting,” he said. “Instead of finding lower prices, the farmers experienced sticker shock and higher input costs, which are increasing the break-even price they need from the market.”

The conflict has also spurred December 2026 and November 2026 corn and soybean futures prices to move higher since the end of February, Davis said. As of press time, December 2026 corn was trading at $4.97 and November 2026 soybeans at $11.87. The challenge for farmers, he said, is to use price risk management tools to mitigate harvest price risk and secure profitable prices when available.

“Farmers must know their production costs and the price needed to cover them, along with debt obligations, family living expenses, land and machinery costs,” Davis said. “This price point will vary across farms, with those owning a larger share of their land base better positioned to take advantage of pricing opportunities because they have a lower cost structure.

“Younger and beginning farmers who rent a greater percentage of their land base, pay for machinery, provide for a growing family, and pay off debt accumulated from growing their business will face greater challenges in finding pricing opportunities, given their cost structure.”

For 2027, cash receipts from crops and livestock are projected to increase 2 percent each, the RaFF report said. Direct government payments are expected to decline 39 percent, and crop insurance indemnities are expected to fall 12 percent.

Davis said the effect of consecutive years of financial losses is beginning to show in data released by the Chicago Federal Reserve, which covers Indiana. The Federal Reserve surveys show that agricultural loans are being extended instead of being paid off within the original loan period, Davis said. This is a sign of liquidity and profitability stress, he added.

Chapter 12 farm bankruptcies have increased, with nine farm businesses filing last year, Davis said. No chapter 12 bankruptcies were filed in 2024.