*This is the first article in our 2026 Southwest Economic Outlook series. Economists from Texas A&M University and Texas A&M AgriLife Extension, and Oklahoma State University and Oklahoma State University Extension provide a 2026 outlook on various topics and commodities. A digital copy of the Economic Outlook Issue is also available online.
One can’t help but think of the opening of Charles Dickens’ “A Tale of Two Cities” when you think about where the agricultural economy is today: “It was the best of times, it was the worst of times.”
Of course, you will see reports that national farm income substantially improved in 2025 relative to 2024 and even approached record highs. Those numbers are led by a livestock industry enjoying record prices, continued strong retail demand and inexpensive feed costs.
But what lies underneath the very broad measure national farm income is one of the most challenging thin-to-negative margin environments ever faced by many of today’s commercial row crop producers.
So, where does the industry go from here?
The broader U.S. economic outlook for 2026 from most experts is more of the same. Uncertainty runs rampant as the daily, sometimes hourly, news cycle reports constantly changing significant trade policy, negotiations, deals, and rumors of deals. Don’t expect that to change, but amid the perpetual noise, most are expecting modest economic growth of around 2%.
While inflation has been somewhat tamed in recent years, it remains closer to 3% than to the Federal Reserve’s target of 2%. After reaching historic lows of around 3.5% in 2023, the current unemployment rate has crept up slightly but remains between 4% and 5%, what most consider to be full employment.
Translating the influence of broad economic indicators to the farm economy is not so simple. Steady economic growth and low unemployment would generally be positive for agriculture and an indication that final consumer demand for food, fiber and energy continues to grow. However, low unemployment and the current dynamics of immigrant worker policies create a tight market, forcing costs higher for labor-intensive agricultural sectors. Persistent inflation has held most ag input costs high and inching higher.
Bright spot
Beef is the bright spot among U.S. agricultural sectors. A strong general economy often manifests in a confident consumer base, and that is certainly the case with retail beef demand despite higher prices.
Consumer demand is paired with a tight cattle inventory, with limited indicators of expansion in 2026. Look for strong beef price trends to continue and for the cattle sector to carry the load in broad national farm income measures.
However, row crop producers are facing one of the most difficult market environments in recent history. Looking across the 2026 outlook for row crop commodities, there is a consistent theme: Record and near-record production in 2025 will leave most markets with ample stocks heading into next year, creating downward pressure on price.
While domestic demand is strong, it is quite satisfied; it will take a strong export market to move the needle on commodity prices.
Outpacing demand
It is often said and is still worth repeating, the U.S. has the most abundant, affordable and secure food supply in the world. By design, that supply occasionally outpaces demand to the point where prices are pushed low enough to present profitability challenges for producers. That’s where we are today, and it appears to be what’s in store for 2026.
Also by design, an effective safety net is necessary to support the long-term viability of individual producers in times like these. That safety net was bolstered in 2025, but those changes will not take effect until late 2026. Look for continued financial pressure and the potential for additional federal ad hoc support for the industry in 2026.
In the meantime, producers will continue responding to market conditions with resilience and innovation. Tight margins will lead to new efficiencies, technology adoption and production at higher volumes.
Producers will do well to pay close attention to their budgets, crop mix alternatives, risk management tools, cost controls, debt management and marketing opportunities. It is equally important for livestock producers to manage through these good times and take the opportunity to establish a solid financial foundation and prepare for what is always an uncertain future.
