US Direct Farm Payments Jump from $28B to $47B in 2026

US direct government payments to farmers jumped from $28 billion in 2025 to $47 billion in 2026, according to McKinsey's new analysis — roughly 27% of net cash farm income, up from 16% a year earlier. The share is, in the words of McKinsey partner Tom Brennan, "very much an anomaly."

The finding anchors a week of sobering data for growers heading into 2027. Purdue University's latest Ag Economy Barometer, released last week, shows overall US farmer optimism up slightly in October. Balance sheets tell a harder story: farmers reporting a strong financial position fell from 76% in January to 60% by October.

"While producers saw some relief this month due to government program support, many remain uncertain about how future policy decisions could affect agriculture," said Michael Langemeier, the barometer's principal investigator and director of Purdue's Center for Commercial Agriculture.

"Responses to our policy questions suggest that concerns about trade policy and the country's broader direction are shaping how producers view agriculture's long-term prospects," Langemeier said.

Who is propping up US farm income?

McKinsey's report, published this week, finds US net cash farm income in 2026 roughly flat with 2025 — but the composition has shifted sharply toward Washington. Programs including the Farmer Bridge Assistance program and the Harvest Fuel Relief program drove the near-$20 billion increase in direct payments.

Brennan said it is tough to predict whether Washington will write another check in 2027. Fertilizer may be the bigger swing factor. Growers who bought inputs in fall 2025 were shielded from the jump in nitrogen and phosphate prices that followed February's disruption in the Strait of Hormuz. They have not yet purchased for 2027, and McKinsey is surveying them now on their plans.

When budgets tighten, farmers cut phosphate and potash before nitrogen, Brennan noted. "You can do that for a bit, but eventually you're getting pretty deficient in the soil within a year or two."

A weaker South American harvest driven by El Niño would firm commodity prices and could actually aid US growers, he added.

How bad is Brazil's input squeeze?

Brazil's Selic benchmark rate remains high relative to 2020–21, when many farmers took on debt. Brazilian banks have pulled back on new lending to focus on existing loan books.

"When your financing costs are high, when fertilizer and fuel costs are high, it's not necessarily reflected in the [price] of your output," said Tim Lillie, a McKinsey partner based in Argentina.

McKinsey's report puts fertilizer affordability in Mato Grosso at multiyear lows. Growers now need roughly 50 bags of soybeans to buy a ton of MAP fertilizer, up from 43 bags. Among surveyed Brazilian farmers, 68% named extreme weather among their top three risks.

El Niño cuts both ways, Lillie cautioned. Specialty crop yields in Peru are already suffering, while Argentina and parts of Brazil could see more rain and possibly better yields. "Could is the operative word," he said.

What does this mean for agtech adoption?

McKinsey's global survey of 5,500 farmers, fielded in March and April, found a "laser focus on ROI" among North American farmers weighing precision agriculture tools. European farmers weighed usability as well.

One category is holding. Biostimulants are "now an established part of the farmer portfolio," Brennan said, with farmers reporting $20 or more back for every $10 an acre spent and planning to maintain or increase that spending.

The survey did not measure whether farmers are trialing fewer new technologies or practices such as no-till and cover cropping. But Brennan said McKinsey has heard anecdotally from farmers, retailers and companies that when times get tough, growers experiment less than in boom years.

The averages mask wide divergence by region, farm and crop, Lillie said. Some farmers still plan to buy new machinery this year; others are deferring major purchases until uncertainty clears.

"When you look at it as an overall average, yes, there's messages there you have to take away," he said. "But particularly getting into the detail, you start to see there are still opportunities out there."

The takeaway: with a quarter of US farm income resting on government checks and Mato Grosso fertilizer affordability at multiyear lows, 2027 input decisions — and agtech budgets — will hinge on trade policy, the Strait of Hormuz aftermath and El Niño's uneven rainfall.