In 2025, the financial panorama for U.S. farmers presents a dichotomy between crop and cattle producers. While those cultivating crops encounter falling prices despite slight reductions in input costs, cattle ranchers benefit from record-high prices. This scenario is further complicated by uncertainties in trade policies. To assist stakeholders in comprehending this intricate situation, the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri has issued its yearly agricultural market baseline outlook. This report projects agricultural and biofuel markets over a decade and serves as a benchmark for evaluating alternative agricultural and food policy scenarios.

The FAPRI report reveals a potential temporary recovery in net farm income after two years of decline, attributed to government payments. However, director Pat Westhoff warns that this recovery may be short-lived, with projections showing a downturn starting in 2026. The pressure on net farm incomes has been significant, and while one-time governmental assistance offers relief in 2025, future fluctuations in policies or market conditions could significantly alter these figures.

Another critical factor affecting farm income is the ongoing drop in crop returns. The report forecasts that the combined returns for four major U.S. crops during the 2025-26 marketing year will halve compared to the 2021-22 period. Research economist Bob Maltsbarger emphasizes that high production expenses, particularly fixed costs like land and machinery, are squeezing margins for crop producers.

Beyond the financial challenges faced by crop producers, the report highlights other market trends. Cattle prices have risen since their 2020 lows and are anticipated to hit record levels in 2025. Additionally, pork and poultry production continue to grow due to increasing productivity. The strong expansion in renewable diesel production has heightened demand for vegetable oil and other fats and oils, an area where policy changes could dramatically influence future projections.

Highly pathogenic avian influenza has caused flock liquidations, driving egg prices to unprecedented levels in February 2025, with continued price volatility expected. Consumers are also experiencing the effects of these market shifts through food price inflation, with projected increases of 2.6% in consumer food prices in 2025, largely driven by rising meat and egg prices.

FAPRI co-director Julian Binfield underscores the importance of their baseline report in aiding farmers and policymakers in assessing risks and opportunities in agricultural markets amidst uncertainty. This annual document summarizes ten-year baseline projections for various economic indicators, including farm income, farm program spending, and domestic commodity markets, offering valuable insights into the evolving agricultural landscape.