Deere Boosts Automation Investments as 2026 Farm Income Falls 0.7% to $153.4B
USDA forecasts 2026 net farm income will dip 0.7% to $153.4 billion, potentially pressuring Deere's near-term equipment demand. Deere is increasing investment in automation and precision agriculture technologies as farm-equipment industry EV/EBITDA trades at 30.66×, well above its five-year median of 19.84×.
1. Farm Income Outlook
The U.S. Department of Agriculture forecasts net farm income will decline by 0.7% to $153.4 billion in 2026, with wheat and rice receipts falling and soybean revenues flat. Despite a $13.8 billion increase in government farm payments to $44.3 billion, the overall drop in income may weigh on near-term demand for new equipment.
2. Deere's Technology Investments
Deere is ramping up R&D and capital spending to strengthen its automation, precision agriculture and smart farming solutions. These investments aim to boost productivity, reduce input costs and position Deere as a leader in high-tech farm machinery.
3. Industry Valuation
The manufacturing–farm equipment industry is trading at a trailing 12-month EV/EBITDA of 30.66×, significantly above its five-year median of 19.84× and the S&P 500’s 17.70×. Elevated multiples reflect investor confidence in long-term growth drivers despite short-term income headwinds.
4. Equipment Market Growth
The U.S. agricultural machinery market is projected to grow at a 2.38% CAGR from 2025 through 2031. Growth is fueled by larger farm sizes, rising labor costs, mechanization trends and government subsidies that make high-end equipment more accessible.