2026 Inputs and Production Expenditures

Factors Affecting 2025 Expenditures

In 2025, total U.S. farm production expenditures are expected to stay relatively steady, increasing only $315.8 million to reach $467.4 billion, which is less than a 1% rise over 2024 expenditures, according to the U.S. Department of Agriculture (USDA; Economic Research Service [ERS] Farm Income Team, 2025a). Despite this modest increase, inflation-adjusted spending levels make 2025 the seventh most-expensive year on record (Figure 1). This continues the overall upward trend in production costs that has lasted more than 10 years. In the last 5 years alone, annual U.S. farm production expenditures have risen by about $33.9 billion, a 7.8% increase.

Over this period, a combination of global and domestic factors has driven these surging costs. Internationally, the COVID-19 pandemic, military conflicts in the Middle East and Eastern Europe, and other disruptions have strained supply chains, created product shortages, and increased market uncertainty. These factors have placed upward pressure on the prices of fertilizer, energy, pesticides, and other inputs.

Domestically, the U.S. Federal Reserve’s efforts to combat inflation—by raising the target federal funds rate beginning in March 2022—led to significantly higher interest expenses for producers compared to the historically low rates of prior years (Board of Governors of the Federal Reserve System, 2026). Additionally, shifts in U.S. trade policy during this period contributed to price volatility in several key agricultural input markets.

Notable Input Expense Changes in 2025

The USDA ERS forecast a mixed outlook for farm production expenditures across major input categories in 2025 (ERS Farm Income Team, 2025b). Notable increases are expected in livestock and poultry purchases, interest, and labor categories, which are projected to rise by $10.6 billion (21.5%), $2.0 billion (4.7%), and $2.2 billion (4.2%), respectively (Figure 2). The sharp increase in livestock and poultry purchases is largely driven by recent strong demand for animal products, particularly cattle, along with tighter inventories that have resulted in elevated market prices.

In contrast, feed and pesticide expenditures are projected to decline in 2025 relative to 2024, falling by $4.6 billion (6.2%) and $1.1 billion (5.1%), respectively. The reduction in pesticide spending partly reflects the easing of postpandemic supply-chain constraints and improved product availability. Meanwhile, lower feed expenditures stem from softer global demand for U.S. grain and soybean products, which has contributed to lower feed prices.

Outlook for 2026

Forecasts for 2026 indicate that producers should expect mixed price movements across major farm input categories. Key Georgia crop inputs, including interest, H-2A labor rates, and fuel, lube, and electricity, are projected to decline by 7% to 12% (ERS, 2025).

Although total farm sector debt remains historically high, lower borrowing costs anticipated in 2026 are expected to reduce crop production interest expenses by roughly 12% (ERS, 2025).

Georgia producers who rely on H-2A labor will also see modest relief in 2026 because of recent changes in the U.S. Department of Labor’s methodology for calculating the adverse effect wage rate (AEWR). After a 34% increase in H-2A wage rates since 2022, the new AEWR for many Georgia operations is expected to fall by about 10% to an effective hourly rate of $14.47 in 2026 (Georgia Department of Agriculture, 2025).

Additionally, expenditures in the fuel, lube, and electricity category are projected to decline by 7%, reflecting weaker global demand growth and increased OPEC+ oil production (Bosoni, 2025).

In contrast to these declines, fertilizer is the only major input category expected to rise by more than 5% in 2026. This increase is driven largely by strong global demand for phosphorus fertilizers and continued export restrictions by China, the world’s leading producer of phosphate products. As a result, higher fertilizer prices will pose a significant challenge for crop producers in the coming year.

Other uncertainties remain for 2026, including possible U.S. trade policy changes affecting pesticide and pesticide-ingredient imports. However, lower energy prices, reduced interest rates, and a declining AEWR provide encouraging signals for Georgia agricultural producers as they prepare for the 2026 production season.

References

Board of Governors of the Federal Reserve System (US). (2026). Federal funds effective rate. Federal Reserve Economic Data, Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/series/FEDFUNDS

Bosoni, T. (2025, October 17). As oil market surplus keeps rising, something’s got to give [Commentary]. International Energy Agency. https://www.iea.org/commentaries/as-oil-market-surplus-keeps-rising-something-s-got-to-give

Economic Research Service. (2025). Commodity costs and returns. U.S. Department of Agriculture. https://www.ers.usda.gov/data-products/commodity-costs-and-returns

Economic Research Service Farm Income Team. (2025a). Nominal and inflation-adjusted U.S. farm production expenses, 1970–2025F [Chart]. U.S. Department of Agriculture. https://ers.usda.gov/data-products/chart-gallery/chart-detail?chartId=82242

Economic Research Service Farm Income Team. (2025b). U.S. farm sector debt, inflation adjusted, 1970–2025F [Chart]. U.S. Department of Agriculture. https://ers.usda.gov/data-products/chart-gallery/chart-detail?chartId=82246

Georgia Department of Agriculture. (2025, October 7). Agriculture Commissioner Tyler J. Harper applauds Trump administration H-2A visa changes as “Huge win for Georgia’s #1 industry” [Press release]. https://agr.georgia.gov/pr/agriculture-commissioner-tyler-j-harper-applauds-trump-administration-h-2a-visa-changes-huge-win