A recent U.S. Department of Agriculture (USDA) forecast predicts a record $180 billion in net farm income for 2025, but a closer look reveals a troubling reality for many farmers: Record production costs and falling crop receipts mean most farmers are operating at a loss.

The rosy national figure is complicated by its components, said Faith Parum, an economist at American Farm Bureau Federation (AFBF). She said a significant portion of the projected income — over $40 billion — comes from government assistance programs, many of which are payments for losses from 2024, meaning it’s not a reflection of current market...