U.S. Farm Production Costs

American agricultural producers faced another grueling financial landscape in 2025, with total farm production expenditures climbing 1.9% to reach an estimated $490.3 billion, up from $481.3 billion in 2024. According to a newly released USDA National Agricultural Statistics Service (NASS) report, the national average farm production expenditure rose 3.1% to $263,955 per farm.

At the heart of the national agricultural economy, the Midwest region contributed the most to total expenditures, accounting for $156.5 billion—or 31.9% of all expenses nationwide—climbing from $149.4 billion the previous year.

The Big Four Cost Drivers

Nationwide, production costs remain heavily concentrated in just a few key categories. The four largest expenditure items totaled $245.5 billion, consuming 50.1% of all money spent by producers last year:

1. Livestock, poultry, and related expenses: $74.4 billion (15.2%)

2. Feed: $71.0 billion (14.5%)

3. Farm services: $55.0 billion (11.2%)

4. Labor: $45.1 billion (9.2%)

While feed costs saw a welcome dip from $73.1 billion in 2024, livestock and related expenses surged significantly, jumping from $53.5 billion to $74.4 billion as producers navigated shifting market dynamics.

Crop vs. Livestock Divergence

The 2025 data highlights a stark financial divergence between crop and livestock operations:

• Crop Farms: Total expenditures dropped 6.6% to $235.3 billion (averaging $284,017 per farm). The largest expenses for grain and row-crop producers centered on labor ($30.8 billion), farm services ($30.5 billion), rent ($28.8 billion), and fertilizer, lime, and soil conditioners ($28.3 billion). Combined crop inputs (chemicals, fertilizers, and seeds) accounted for 30.0% of total crop expenses at $70.6 billion.

• Livestock Farms: Total expenditures climbed 11.2% to $255.0 billion (averaging $247,804 per farm). Livestock purchases ($72.3 billion) and feed ($69.2 billion) alone made up more than 55% of total outlays for livestock operations.

Energy and Operating Realities

Fuel expenses ticked upward slightly to $15.6 billion overall. Diesel—the lifeblood of field operations—accounted for $10 billion of that total, ticking up 1.0%. Meanwhile, LP gas saw a sharp spike, climbing 13.3% to $2.0 billion, adding pressure to grain-drying operations.

On a state-by-state level, Iowa solidified its place as an agricultural powerhouse, ranking as the second-highest state in the nation for total expenses at $37.8 billion (7.7% of the U.S. total), trailing only California ($43.8 billion) and closely followed by Nebraska ($32.4 billion) and Texas ($32.0 billion).

As input costs remain stubbornly high heading further into 2026, producers continue to sharpen their pencils, focusing heavily on operational efficiency to protect profit margins.