This Policy Report column was first published by Nebraska Farmer on June 4, 2026, and is excerpted here with permission.
Earlier this year, the Center for Agricultural Profitability at the University of Nebraska-Lincoln released updated farm income projections in collaboration with the Rural and Farm Finance Policy Analysis Center at the University of Missouri
The projections pointed to record farm income in Nebraska in 2026 based on the analysis from early spring, but those headlines caught many readers by surprise amid other headlines pointing to increased financial stress and challenges for agriculture.
Explaining the seeming contradiction between the headlines depends on a deeper analysis of the outlook and a recognition of the complex, diversified agricultural economy in Nebraska that, to paraphrase a famous story, describes a tale of two farms.
More specifically, the story could be a tale of a farm and a ranch and the diverging outlook for the crop and livestock sectors, something that has played out in real time in Nebraska over the past few years.
An analysis of the projections, the fundamental drivers of the ag economic outlook at present, and the uncertainty and concerns still ahead can help tell the full story.
The outlook
Starting at the national level, U.S. net farm income projections for 2026 stand at $153 billion, down marginally from the current 2025 projection, and down sharply from the record level of $182 billion in 2022. In Nebraska, the record farm income year was actually 2023, because of drought-impacted production losses in 2022.
The current projection for Nebraska farm income in 2026 is $9.96 billion. That is up from the projected 2025 level of $8.9 billion, partly due to timing shifts of ad hoc government payments between 2025 and 2026. If realized, farm income would surpass the $9.3 billion record from 2023.
While the farm income numbers for Nebraska look strong in total, we also have reports of deterioration in farm financial conditions and increases in Chapter 12 bankruptcy filings across the country as recently documented by the Federal Reserve Bank of Kansas City’s Center for Agriculture and the Economy.
The same report, however, noted the disconnect between the underlying fundamentals and the current concerns about farm finances and pointed to the need for careful analysis.
What are the drivers?
A deeper analysis of the projections shows the impact of three principal drivers of the ag outlook at present: the crop sector, the livestock sector and government payments:
Crop income is down. The farm outlook for the crop sector shows the deterioration since 2022 when the U.S. farm income record was set. Crop receipts in Nebraska that were at $16 billion in 2022 have fallen to a projected $12 billion in 2026, a drop of 25%.
Subtracting purchased seed, fertilizer and chemicals to calculate an adjusted gross margin shows an even greater drop in margin of 40% compared to 2022. The combination of lower crop prices and higher input costs has severely eroded the margin for crop producers over the past few years.
Livestock income is up. In comparison, the outlook for the ranch has been record prices and returns. Livestock receipts in Nebraska are about 90% cattle and have grown from $16 billion in 2022 to a projected level of nearly $24 billion in 2026, an increase of 50%.
From being on par with crops in 2022 to now being double the crop receipts, the livestock sector has grown on the strength of cattle prices that have set repeated records over the past few years. If we calculate a similar adjusted gross margin for the livestock sector by subtracting purchased feed and livestock, the resulting margin has grown even more, up more than 60% since 2022.
Government payments are up. These have become a major component of net farm income in the past several years. After a period of time in which government payments were relatively small, the combination of commodity program payments and supplemental or ad hoc payments have grown dramatically.
Current projections show government payments in Nebraska of nearly $3 billion in 2026 versus about $1.7 billion in 2025, and just $560 million in 2022. That more than makes up the entire increase in farm income for 2026 to establish a new record.
Commodity program payments (ARC, PLC and marketing loan benefits) are projected at $760 million in 2026 as compared to just $3 million in 2022. The dramatic increase is due not only to lower commodity prices, but also to the safety net increases included in the One Big Beautiful Bill Act of 2025.
Those increases took effect immediately for the 2025 crop year, but ARC and PLC payments are made after the end of the marketing year, so the increases will show up for the first time this October.
In the meantime, USDA implemented ad hoc assistance in the form of the Farmer Bridge Assistance Program, ostensibly to bridge the gap between when the safety net was improved and when producers would first realize the benefit. The program has paid out nearly $650 million to Nebraska producers in 2026.
USDA also has been providing ad hoc assistance passed by Congress in late 2024 to address ag disaster losses from 2023 and 2024. For the Supplemental Disaster Relief Program part of the assistance, Stage I rolled out in 2025, but Stage II sign-up continued into 2026, and expected final payments for both stages will also add to projected 2026 government payments
