Ag Economists Monthly Monitor

Half of Ag Economists Say Crop Profitability Might Still Be 3 to 5 Years Away

Thu, 02 Jul 2026 16:48:24 GMT

Crop farmers waiting for stronger returns might have a longer road ahead than many hoped. According to Farm Journal’s June Ag Economists’ Monthly Monitor (AEEM), half of the agricultural economists surveyed don’t expect crop agriculture to return to broadly profitable margins for another three to five years. The results highlight growing concerns over tight margins, shrinking working capital and continued uncertainty surrounding demand and production costs.

Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry through the Ag Economists Monthly Monitor. Of the 17 economists who responded to the May survey, 19% believe crop profitability will broadly return in the next one to two years and 50% say three to five years while 31% expect profitability will remain highly variable.

The reality is without direct government farm program payments, which are forecast to total $44.3 billion for the current year, a $13.8 billion increase from the previous year, the ag economic picture would look even worse.

“U.S. farm income is more than ever tied to ad hoc payments or similar subsidies for biofuels and crop insurance,” said one economist.

Biggest Takeaways from the June Monthly Monitor

50% of economists who responded expect crop agriculture won’t return to broadly profitable margins for 3 to 5 years.
Commodity prices below breakeven remain the top concern across much of crop agriculture.
Input costs, debt and declining working capital continue to pressure farm balance sheets.
Weather, Chinese demand and trade were cited as the biggest wild cards over the next 12 months.
40% believe farmers planted about the right number of corn and soybean acres this year.
44% say fewer corn acres would have been the most supportive outcome for grain prices following USDA’s June Acreage Report.

Mixed View on Economic Conditions

Economists paint a mixed but still cautious picture of the current ag economy. Compared to one month ago, a majority say conditions are either unchanged (52.94%) or somewhat better off (23.53%), with none of the economists who responded reporting a significant decline.

The longer-term view remains more negative. When compared to a year ago, 62.5% of economists who responded say the ag economy is somewhat worse off, which was a glaring statistic in the latest survey, while just 12.5% say it is somewhat better off. Looking ahead a year, 35% expect conditions to be somewhat better off but 47% anticipate no change.

Farm Journal’s June Ag Economists’ Monthly Monitor shows a mixed but cautiously improving outlook. Compared to one month ago, most say the ag economy is unchanged or somewhat better off, but 62.5% say conditions are somewhat worse than a year ago. Looking ahead, a majority expect improvement over the next 12 months, with nearly half calling for a somewhat better outlook and 35.29% expecting a much better ag economy.

(Lori Hays)

When asked to list the top factors driving ag economic health, economists said:

Input costs and commodity prices below breakeven remain the dominant concern
U.S. and global crop production, especially corn and soybeans
Weather patterns and yield potential this summer
Export demand, especially Chinese import activity
Trade policy, geopolitical risk, and global market uncertainty
Energy and fertilizer markets influencing both costs and demand
Rising debt levels and declining working capital across farms

Margins Still Driving the Conversation

When asked what will have the biggest impact on agriculture’s economic health over the next year, economists overwhelmingly pointed to profitability. Many said the combination of weak commodity prices and elevated production costs continues to leave producers operating below breakeven.

“We still need to get to a point where prices are covering cost of production,” one economist wrote. Another respondent added that “breakeven costs remain above market prices for most commodities,” while another described crop input prices as “unsustainably unaffordable.”

Even though fertilizer and fuel prices have moderated from recent highs, economists say many farms are still feeling the effects of several difficult years. One respondent noted that working capital has declined “for most farms, even the most profitable,” while another pointed to debt accumulated over recent seasons that continues to weigh on balance sheets.

How do economists view the latest New World Screwworm threat? 75% of Economists Forecast Substantial Economic Hit if Screwworm Outbreak Spreads

Supply Shocks Would Speed the Recovery

While economists see profitability remaining elusive for several years, University of Missouri agricultural economist Ben Brown says the fastest path back to stronger margins would likely come from a supply-driven event rather than a demand surge.

“Because agricultural commodity prices are relatively inelastic, production reductions — whether from lower acreage or lower yields — have increased incomes more quickly than increases in demand,” Brown says.

He adds that when coupled with the farm safety net for row crop producers, a weather-related production shortfall would likely provide the quickest return to profitability in the short term.

Carl Zulauf, Professor Emeritus in the Department of Agricultural, Environmental and Development Economics at The Ohio State University, agrees, saying this is especially the case if the supply shocks come outside the US.

“Contrary to the prevailing story in the market and media, stocks are not burdensome by any measure that I would use. They are adequate at best,” Zulauf adds. “A supply shock in one or more major production regions could send prices notably higher. I would also go one step further than Ben, I think we are building a demand lead market. But, yield trumps everything. If we have high production in the northern hemisphere, price will remain muted to low.”

Brown notes demand for feed grains remains solid despite disappointing prices.

“We continue to grow more global supplies of feed grains, justifying a need to continue increasing demand, but this is a period where we have growing demand with relatively muted prices because of available supplies,” he explains.

Brown also points out that total farm income may paint a different picture than cash market returns alone. Brown says when cash receipts are combined with Farmer Bridge Assistance payments, crop insurance indemnities and potentially larger ARC/PLC payments, some producers could see a return to profitability during the 2025-26 marketing year. Additional congressional assistance, if approved, could further improve the outlook.

But other economists point to biofuels as an important factor to watch when it comes to the ag economy.

“Biofuels use creates the conditions for higher prices (though ample supplies and good weather mean prices don’t have to rally). But specific biofuels price impacts always depend on policy implementation details. It looks like we need a lot of bio-based diesel to meet the new RVOs but the industry does not simply buy beans to comply, they consider all potential avenues.” said one economist.

“I think the biofuels policy on oilseed is a big deal,” Zulauf says. “It is not clear how it will work out since so many sources are available, but the potential expansion in demand is large as Scott Irwin has been pointing out recently. It is something to watch. I also think exports need to be watched, especially for corn. They have been quite strong this year and appear to be maintaining a nice pace.”

Production Isn’t Contracting, Yet

Despite persistent margin pressure, Brown doesn’t believe financial stress has reached the point where it’s reducing U.S. crop production capacity.

“I do not think we have reached the point of financial pressures causing production contraction in the U.S.,” Brown says. Instead, he says farmland leaving one operation because of retirement, downsizing or even bankruptcy is typically being absorbed by another producer, keeping those acres in production.

Brown believes the biggest long-term threats to production capacity are not financial. Instead, he points to urban development, solar projects and data centers permanently converting farmland to other uses.

Zulauf says margins may be tight, but it hasn’t created a tipping point yet, especially when you consider the cushion from government payments.

“Current input prices are not high when you factor in government payments. You cannot give the kind of payments we have given farmers over the last 10 years and not expect input prices to increase. Farmers want to farm and will spend the money on the farm,” Zulauf says.

Weather and Demand Could Shift the Outlook

Outside of margins, economists identified weather as one of the biggest variables that could change the farm economy over the next year. Respondents pointed to U.S. crop yields, global production and developing El Niño weather patterns as key drivers of grain prices.

Trade and export demand also ranked high on the list. One economist identified “yields this summer and Chinese import demand” as the two biggest factors to watch, while another wrote, “Although it is a bit like putting Humpty Dumpty back together, we need a deal with China.”

Brown agrees export demand remains a major wildcard, particularly if future trade negotiations include agricultural purchase commitments.

“If gaining access to the U.S. consumer market is contingent on China buying $15 billion of U.S. corn, that seems like a tradeoff China would make,” Brown says. “A purchase commitment of that size would increase prices for U.S. corn producers relatively quickly.”

Still, Brown cautions there’s little evidence China currently needs large corn imports, making those commitments difficult to factor into marketing plans. Instead, he encourages producers to maintain flexibility through risk management strategies, including options, that preserve upside potential while limiting downside risk.

Are Farmers Becoming Less Responsive to Price?

Ahead of USDA’s June Acreage report, economists were asked which outcome would have been most supportive for grain prices. Forty-four percent selected fewer corn acres, while 19% favored fewer soybean acres and another 19% said more prevented planting would have provided the biggest boost.

Despite today’s tight margins, most economists don’t believe producers overplanted this spring. Sixty percent said the 180 million combined corn and soybean acres planted in 2026 were “about right,” while 40% felt farmers planted somewhat too many acres.

Ag Economists’ Monthly Monitor

(Lori Hays)

June Ag Economists’ Monthly Montior

(Lori Hays)

Brown says agriculture as a whole appears to be becoming less responsive to traditional price signals.

“As a sector, we are becoming less responsive to price signals,” Brown says. He points to cattle producers who have been slow to rebuild herds despite improved returns, as well as crop farmers who have largely maintained acreage despite tighter margins. However, he notes there are exceptions, including Illinois producers shifting some corn acres to soybeans and Arkansas farmers reducing rice acres in favor of soybeans as relative returns change.

“Supply responses take time,” Zulauf says. “They happen but fixed assets and management momentum dampen them.”

Watching Farm Finances More Than Markets

While grain prices remain important, many economists who responded this month say they are paying even closer attention to farm balance sheets. Loan delinquencies, operating debt and working capital were among the most frequently cited indicators for measuring the health of the ag economy.

Others warned that strong farmland values may be masking financial stress. “Farm debt-to-asset ratios are key, but farmers are inherently asset rich and thus changes are often masked,” one economist wrote. Another cautioned that if producers struggle to repay operating loans, it could eventually lead to less lending and more financial stress across agriculture.

Most closely watched indicators include:

Corn prices and overall commodity price direction
Input costs, especially fertilizer, fuel and inflation trends
Chinese import demand and broader export activity
Land values and farm balance sheet strength
Loan delinquencies and 30–90 day past-due farm loans
Farm debt-to-asset ratios and working capital trends
Biofuel demand and implications of Renewable Volume Obligations (RVOs)
U.S. corn production and acreage outlook
Consumer spending and broader economic health

Beyond market pricing, several economists stress that policy and demand-side variables are becoming more influential, particularly biofuels policy and trade agreements. One respondent noted that biofuel demand continues to shape both crop and livestock markets, while another pointed to the importance of long-term corn demand and its ripple effects on fertilizer, feed and global acreage decisions.

Others caution that traditional indicators can lag real conditions in agriculture, with one economist noting that real-time input costs like fertilizer and fuel often provide a more immediate read on farm profitability than broader national data. At the same time, rising short-term debt and repayment pressures are emerging as early warning signs that lenders and economists are watching closely heading into the next year.

Fundamentals Still Matter

Although geopolitical events have created significant volatility in recent years, Brown believes supply and demand fundamentals continue to drive agricultural markets.

“I believe commodity prices are being driven by supply and demand fundamentals,” Brown says, adding that risk premiums tied to the Black Sea region and the Middle East have become secondary influences. He acknowledges geopolitical shocks can temporarily disrupt markets—as happened following Russia’s invasion of Ukraine, when cash and futures wheat markets became disconnected—but says those disruptions have largely been resolved.

Instead, Brown believes unexpected international purchase commitments remain the biggest challenge for marketers because they are nearly impossible to predict. That uncertainty, he says, reinforces the importance of building flexibility into farm marketing plans.

“I think the often referred to ‘headline risks’ have introduced uncertainty into the market that clearly has affected prices short term. However, I do not see where the markets have separated from supply and demand in the intermediate and longer term,” Zulauf says. “My my feeling is that we have seen an uptick in option premiums relative to the same futures price. Ben, is my feeling right or wrong? If my feeling is right, this suggests the market is pricing more uncertainty. Moreover, again if I am right, increasing option premiums make it more expensive for them to be used as a marketing tool.”

Looking Ahead

Farm Journal’s June Ag Economists’ Monthly Monitor shows economists still see margins as the defining issue for agriculture over the next 12 months, with input costs and commodity prices below breakeven leading the list of concerns. Many also point to weather and crop production in the U.S. and globally as key swing factors that could quickly alter supply and price direction, particularly for corn and soybeans.

Demand-side uncertainty remains just as important, with export sales and Chinese import demand frequently cited alongside broader trade and geopolitical risks. Respondents also highlight ongoing pressure from elevated input inflation, volatile energy and fertilizer markets, and tightening balance sheets as working capital declines and debt loads continue to build.

75% of Economists Forecast Substantial Economic Hit if Screwworm Outbreak Spreads

Tue, 30 Jun 2026 21:02:57 GMT

A case of New World screwworm (NWS) was confirmed in South Texas near La Pryor, on June 3 . As of June 30, 27 cases have been confirmed in Texas and New Mexico.

Since the announcement, the feeder cattle futures markets reacted, initially falling more than $5 cwt. across contracts on the day of the announcement but rallied the next day. There was no detectable impact on the cash market. Most economists agree the bad news had already been priced into the market.

“I would characterize it that it almost was a sigh of relief — it was a sigh of relief not that it’s a good thing that we got it, but that we finally have it,” explains Derrell Peel, Oklahoma State University Extension livestock marketing specialist. “We finally got it over with. The anticipation and the uncertainty of when it was going to happen was probably worse than the reality of it happening.”

The latest Farm Journal Ag Economists’ Monthly Monitor polled ag economists on how they think NWS will impact the economy if confirmed cases continue to increase. Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry who provide directional insights. Here’s how they responded to NWS-focused questions in June:

Screwworm Economic Impact: High Concern, but Not Yet “Catastrophic”

A significant majority of agricultural economists expect NWS to impact the bottom line if it spreads beyond its current footprint.

75% of respondents anticipate at least a “moderate” (50%) or “significant” (19%) to “severe” (6%) economic impact. However, none of the respondents currently view it as a “catastrophic” threat (0%), suggesting they believe the risk is manageable if contained. This points to the fact producers should remain vigilant but focused on containment rather than panic.

The day after the announcement, Peel predicted NWS would not have much impact on cattle markets and beef markets . “We’re not talking about any change in the supply fundamentals. It’s just not going to have that kind of impact, so it’s really not going to have that much market impact.”

Peel says he still agrees with his statement nearly a month later. He does admit NWS is a huge management issue for the producers who are in an infested zone, as well as agencies and government trying to deal with it. “It’s very costly, but it’s not an overall market impact,” he summarizes.

David Anderson, Texas A&M professor and Extension specialist for livestock and food product marketing, agrees the economic impact will occur in areas where NWS is confirmed because of the increased costs of checking cattle, treating any infested cattle and just the time and effort dealing with the pest.

He predicts the severity and duration of the outbreak will determine how big an impact it is. “I think it’s also important to recognize that it is regional in nature,” he adds. “The whole Southern tier of states could be susceptible.”

(Source: Farm Journal Survey, June 2026)

Mixed Reviews on USDA’s Response

Confidence in the federal government’s handling of the NWS outbreak is fragmented. While 33% rate the USDA’s response as “adequate” and 7% say it is “more than adequate,” a notable 20% view it as “somewhat inadequate.”

The largest single group (40%) says it is “too early to assess,” indicating the industry is in a “wait and see” mode regarding the effectiveness of current mitigation strategies.

Anderson says he is a little surprised by the response on current mitigation strategies.

“ Sterile flies work . We know how to control this pest,” he says. “If I had to fault anything, I think it was a real mistake not getting started on a new sterile fly production facility as soon as the flies started moving north in Mexico.”

(Source: Farm Journal Survey, June 2026)

Support for Reopening the Mexican Border — With Strings Attached

Despite the entry of NWS into the U.S., there is a strong consensus on how to handle trade with Mexico.

71% of ag economists support reopening the border for cattle imports. Crucially, 64% of respondents specify that this should only happen with “enhanced inspection and treatment protocols.” Only 29% believe the border should remain closed entirely.

These statistics point to the fact trade remains vital, but biosecurity at the border is the top priority.

Anderson says he would not have closed the border to begin with, adding the closure had bad consequences for the cattle industry on both sides of the border.

“Cattle feeders and meat packers lost an important supply of cattle and that has contributed a little bit to higher prices by cutting supplies,” he explains. “It has resulted in sharply lower cattle prices to ranchers in Northern Mexico. Those feeder cattle have stayed there, been fed there, and are part of increasing Mexican beef production and our imports of beef from Mexico are increasing. We have exported some beef production from the U.S. to Mexico and have lost some value-added agriculture here.”

Kenny Burdine, University of Kentucky livestock agriculture economist, adds, “U.S. feedlots depend on Mexican cattle imports and U.S. harvest capacity is larger because of those imports. It is also important to note that Mexico is increasing the number of cattle they finish and process as a result of the import ban. This means that they will likely continue to increase domestic production and be a more significant competitor going forward as the border remains closed.”

Peel says when the border opens, he does not expect many cattle to come across initially. “I would not expect to see very many cattle come before fall,” he predicts, due to the time to re-open the ports and the time for producers to get their cattle ready plus July and August are a terrible time to ship cattle.

Ranking the Threats: Weather and Markets Still Outpace Pests

When asked to rank threats to sustainability and profitability, NWS is a serious concern but currently ranks below other economic and environmental drivers.

The Top Threat: Drought/Weather (Mean: 2.13) remains the undisputed king of concerns.
Market Pressure: Retail beef prices/demand (3.33) and Input costs (4.07) are seen as more immediate threats than biological ones.
Pest Pressure: NWS and other pests (Mean: 4.60) rank in the middle of the pack — more concerning than wildfires (5.27) or wolves (7.40), but less pressing than the immediate financial health of the market.

“While NWS is a threat and will be a challenge for operations impacted, I agree that dry conditions in much of the county are likely a larger threat,” Burdine says. “I also am concerned about how consumers will respond to retail price levels, especially as we push through the summer grill season.”

Anderson agrees drought is the big threat. “If we had not had a series of droughts over the last few years across cattle producing areas, we would have more cattle and higher beef production today,” he stresses. “Drought is a significant factor in slowing herd expansion. Beef demand has been very good and is the reason prices are so high today — we would have higher prices based on tighter supply alone but in combination with growing demand we sit at record highs.”

He does not predict NWS will have an impact on consumer beef prices.

“Don’t forget the wildlife side of this,” Anderson adds. “Deer hunting is a big economic activity. NWS has the potential to be devastating to wildlife populations and that could have a huge impact including on ranchers who gain a significant part of their revenue from hunting leases.”

The Hardest Crop to Grow In 2026 Is A Profit Margin

Tue, 02 Jun 2026 23:27:25 GMT

The hardest thing to grow on an American farm right now isn’t corn or soybeans — it’s a profit margin. Between competition from Brazil, Argentina and other countries and the unpredictable nature of trade deals, many U.S. growers are finding survival, much less profitability, an uphill climb in 2026.

According to a recent Farm Journal poll , more than 86% of corn and soybean farmers are worried about global competition from countries such as Brazil and Argentina. Economists say that anxiety is well-founded.

“What’s making this particular period in time rather acute is it’s being accompanied by tight financial margins globally, but especially here in the United States,” says Ben Brown, University of Missouri agricultural economist.

South America Finally Hits A Wall

For years, Brazil has expanded its agricultural footprint at a fast clip, transforming into a global powerhouse for soybeans, corn and cotton. This rapid growth fundamentally changed the global game, flooding the market and driving intense competition.

However, Brazil’s rapid rise is finally starting to slow. Economists note that South American growers are beginning to hit the exact same financial brick wall as U.S. farmers: skyrocketing expenses and tight margins.

“Where we’ve seen kind of 4%-ish acreage growth the past multiple years, we’re actually seeing that slow this year,” says Grant Gardner, an agricultural economist at the University of Kentucky. Gardner notes that international competitors are dealing with many of the same headaches as U.S. growers regarding input prices, especially for nitrogen fertilizer.

Even so, economists are split on just how much Brazil’s momentum will actually cool. Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry through the Ag Economists Monthly Monitor (AEMM). Of the 17 economists who responded to the May survey, six believe Brazil’s soybean expansion will drop significantly because clearing and preparing new land has simply become too expensive. Conversely, another third believe that favorable currency exchange rates will offset those costs and keep their expansion moving at its usual pace.

Regardless of how fast Brazil expands, the good news for American growers is that the U.S. retains a massive structural safety net when times get tough.

“Long-term, if you’re in the U.S., we are set up better,” Gardner says. “If we think about what the Risk Management Agency does with crop insurance, and our farm programs, we have some income-smoothing abilities in the United States that they simply don’t get in Brazil.”

Hidden Costs And A Window of Opportunity

While Brazil can grow crops more cheaply overall due to lower land and labor costs, South American farmers suffer from distinct structural vulnerabilities: high interest rates and a dependency on imported fertilizer.

“They have a lower cost structure, but it’s because of land and labor. It’s not because of the input costs,” Brown explains. “The way their soils are structured, they have to buy a lot of fertilizer, and they have to import a lot of that fertilizer from the global market.”

When high global interest rates are tacked onto those massive fertilizer bills, the financial strain multiplies. Brown believes this mounting economic pressure will finally catch up to Brazilian farmers by next winter, causing a meaningful drop in their production that could open a vital window of opportunity for U.S. exports.

“We could start to see the market respond with a little higher prices at the back end of 2026. Certainly, by the time the calendar turns to 2027, those might be some good opportunities to move some old-crop grain and oilseeds,” Brown anticipates.

The $29 Billion Question

While U.S. growers look for an edge in South America’s vulnerabilities, they are also trying to parse what to make of China’s recent promise to buy $29 billion worth of U.S. agricultural goods (excluding soybeans). While it sounds like a victory on paper, many economists are skeptical.

In the May AEMM survey, 60% of economists called the promise “moderately positive,” viewing it as a minor safety net for prices rather than a true game-changer. One-third saw it as completely neutral, and notably, not a single economist categorized the deal as highly positive.

(Lori Hays)

“Purchase commitments are very hard to measure,” Brown says. “They don’t follow the traditional economic logic of buying behavior of consumers — in this case, the consumer being a whole country.”

Other economists noted that while markets have reacted favorably to the headline, history suggests caution.

“It is perceived by the market as positive. I am somewhat skeptical of how long it will stick, though. It wouldn’t be the first time either the U.S. or China shifted after making a decision,” replied one economist in the Monthly Monitor.

History shows such trade deals are rarely straightforward; both sides have a habit of shifting timelines, renegotiating data sets, or altering terms after agreements are signed. Furthermore, without soybeans on the table, it will be logistically and physically difficult for China to find $29 billion worth of other U.S. crops to buy.

“When they bought large sums of non-soybean values and volumes of product from us previously, it was a lot of corn and a lot of beef, and right now both categories are a little bit hard to justify,” Brown says. “There’s not great signals that would fully support that they need our corn. The beef equation is a little bit more complex, because we don’t really have the beef to send them.”

Even under the most optimistic scenario, economists view the agreement as supportive rather than transformational. Gardner says while he is concerned about what China will ultimately be willing to buy, he has “less skepticism” toward the agreement after Chinese leadership came back to the table last November, and again this January and February, to purchase soybeans.

“So, I think they are going to come to the table. The question is, how long can we keep them there?” he asks.

Looking Ahead: Acreage And Inputs

As macro-economic factors play out on the global stage, American farmers will need to make tough, localized decisions regarding their crop mixes for 2026-27. Brown says corn will continue to lead the crop mix in total U.S. acres this year (2026), though there will be “a few more” soybean acres planted.

“Now, ‘few’ is a subjective term, right? It could be 1-million or 2-million acre shifts,” Brown notes. “I still think that places more corn acres in the United States relative to soybeans, but I do think that we move back closer to a narrower gap between the two.”

Gardner offers a similar perspective for his region. He expects 2026 corn acres to slip from earlier projections, with more soybeans showing up in the Mid-South and South, while some marginal ground may be left completely idle. He has heard reports of some producers skipping shaded field edges and wet areas. “While small individually, these areas can add up nationally,” Gardner says.

Input management will be the defining factor for profitability. Farms that have historically over-applied fertilizer may be able to trim application rates without much yield loss, Gardner adds, but those already operating at “just enough” risk giving up bushels if they cut back. Ultimately, what happens after 2026 largely depends on where nitrogen prices go next.

“That’s a tough call. It’s really difficult at this point to make projections for 2027,” he notes.

Economists weighing in on the May Monthly Monitor are similarly split on how farmers will adapt to a prolonged high-cost environment into 2027, as indicated by their feedback: 25% say more farmers will switch from corn and wheat to crops with “lower costs” to produce; another 25% also predict there will be regional shifts to less planting of both crops.

(Lori Hays)

Seize Small Economic Windows

Despite the tough economic environment, Gardner says he has actually grown more optimistic since the winter. Because grain prices have ticked up slightly, he hopes a true break-even point is within reach for more growers.

The biggest piece of advice he offers for farmers navigating this volatile environment? Don’t get distracted by the constant noise on social media, and don’t wait for prices to hit absolute peak highs before locking in sales.

“Commodity prices have pretty much moved with [fertilizer], and so I think that’s a positive,” Gardner says. “From the corn and soybean perspective, you’re not at a bad price right now. That’s exactly when you want to lock some in — before the market shows you whether its next move is up or down.”

40% of Ag Economists Say Many Farms May Need Major Restructuring to Survive

Tue, 02 Jun 2026 20:35:16 GMT

While economists see some reasons for optimism in agriculture, the latest Farm Journal Ag Economists’ Monthly Monitor shows growing concern about farm profitability, borrowing costs, input costs and the broader financial outlook heading into the second half of 2026.

Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry. Providing directional insights, 17 economists responded to the May survey:

Higher interest rates remain a major concern, with economists expecting reduced capital investment and greater financial stress for highly leveraged producers.
Input costs, exports, land values, water availability and farm loan demand are among the top indicators economists are monitoring.
The majority are skeptical that year-round E15 legislation will pass this year, with 60% saying it is either unlikely or highly unlikely.

40% Say Current Economics Require Significant Changes

One of the survey’s most striking findings centers on the sustainability of current farming operations.

Asked how producers will respond if today’s crop prices and input costs persist, 40% of economists said many farms will require significant restructuring to remain viable. Just 33% believe producers can largely maintain their current operational structures under existing conditions.

The results compare to Farm Journal’s recent Farmer and Rancher Sentiment Survey that found 43% of farmers describe their farm’s financial condition as “good.”

The economists’ response reflects growing concern that current margins simply do not work long term for many crop producers. Several respondents pointed to tightening working capital, weaker commodity prices and mounting financial pressures as signs that agriculture is entering a more challenging phase of the farm economy.

One economist noted: “With recent tight financial conditions in the farm sector, it will take a tangible positive improvement in farm finances to see much investment in agricultural capital purchases.”

Another warned current conditions might only be the beginning: “I feel like we will start seeing things shift to very bad in two years if we do not see an up year quickly.”

(Source: Farm Journal Survey, May 2026)

Interest Rates Creating a Potential Breaking Point

That concern becomes even heightened when economists look at borrowing costs. With another interest rate hike expected before year-end, more than half of respondents identified reduced capital investment as one of the most significant consequences for agriculture. An equal percentage warned that higher debt-servicing costs could create a “breaking point” for young, beginning and highly leveraged operations.

While economists do not expect widespread farm failures, they believe rising borrowing costs will increasingly separate financially strong operations from those already under stress.

“The system can continue to function if farmers are well capitalized,” one economist wrote. “Many are profitable but may not have the cash on hand to operate without the loans. If access to cash were to pull back, it would be highly detrimental for farmers.”

The survey suggests lenders, producers and policymakers alike will be closely watching credit conditions throughout the remainder of the year.

(Source: Farm Journal Survey, May 2026)

E15 Outlook Remains Clouded

Despite strong support from ethanol groups and many agricultural organizations, economists remain unconvinced Congress will deliver permanent year-round E15 sales anytime soon. Yet, in the Farmer and Rancher Sentiment survey that gauged views ahead of the midterms , year-round E15 approval is a decisive voting factor for nearly half of all producers.

Nearly 47% of respondents said passage is unlikely during the current legislative session.
Another 13% called it highly unlikely.
Just 27% believe passage is likely.

The results highlight ongoing uncertainty surrounding one of agriculture’s most discussed policy priorities and suggest economists see substantial political hurdles remaining despite bipartisan support, despite strong support from ethanol groups and farm organizations.

(Source: Farm Journal Survey, May 2026)

What Economists Are Watching

When asked what indicator they are monitoring most closely right now, responses varied widely, underscoring the complexity of today’s farm economy.

Economists cited:

Commodity prices
Export demand
Fertilizer costs
Diesel prices
Land values and cash rents
Agricultural loan demand
Net farm income
General inflation

One economist from the Rocky Mountain region pointed to water availability as the biggest concern.

“Many irrigation systems are delivering only about 40% to 50% of normal water for irrigation. Some producers will see it as an easier path to sell to developers, furthering the loss of agricultural acres.”

(Source: Farm Journal Survey, May 2026)

The Outlook for 2026: Room for Optimism

The May Ag Economists’ Monthly Monitor paints a picture of cautious optimism mixed with growing concern. Economists see some support from trade opportunities and potential policy developments, but the dominant theme throughout the survey is concern about profitability this year.

One area where some economists see opportunity is in the global cost environment. While U.S. farmers continue to grapple with higher fertilizer and borrowing costs , University of Missouri Extension agricultural economist Ben Brown believes some of America’s biggest competitors may be facing even greater financial pressure.

Brown points to Brazil, where producers rely heavily on imported fertilizer and face significantly higher interest rates than U.S. farmers. He says those higher borrowing costs magnify the impact of rising input prices, creating a substantial financing burden for South American producers.

“All of those things contribute to an environment where I think we could see lower production coming out of South America,” Brown says. “That leads to opportunities for us to trade our product in the global market because it’s going to open up opportunities to ship product to countries that Brazil maybe would have supplied.”

Brown notes that while U.S. producers are feeling pressure from higher interest rates, Brazil’s rates are even higher. When elevated borrowing costs are layered on top of expensive fertilizer purchases, the result could be reduced crop production and slower acreage expansion in South America.

That, in turn, could create opportunities for U.S. corn and soybean exports while providing support for commodity prices.

Brown believes the market could begin recognizing those production risks later this year, potentially supporting prices by late 2026, with more noticeable impacts emerging in 2027.

“We could start to see the market respond with a little higher prices at the back end of 2026,” Brown says. “By the time the calendar turns to 2027, those might be some good opportunities to move old crop grain and oilseeds.”

Still, the survey’s dominant message remains one of caution. Many economists believe producers can weather the current downturn for now. The bigger question is whether margins improve before working capital, borrowing costs and financial pressures force more farms to make significant operational changes.

For now, economists appear to be watching the same variables as producers: input costs, interest rates, exports and commodity prices, hoping that stronger export demand and potential production challenges abroad can help offset mounting financial pressures at home.

New Data: Is U.S. Agriculture Facing a Typical Cycle or a ‘Geopolitical Reset’?

Thu, 30 Apr 2026 18:56:46 GMT

The latest Farm Journal Ag Economists’ Monthly Monitor shows a bit more pessimism from respondents on the current state of the ag economy as well as how the present compares to one year ago.

Farm Journal regularly reaches out to a vetted list of 80 ag economists from across the industry. Providing directional insights, 10 of the 16 economists who responded to the April survey believe the ag economy is in a worse state than it was a year ago. Slightly fewer than half expect conditions to be “somewhat better” in 12 months, while one-third still anticipate further decline.

“I just haven’t really changed my level of pessimism regarding this year. This is going to be a tough year. There’s no doubt about it,” says Michael Langemeier with Purdue University.

The conflict in Iran weighs heavy on economists’ minds; high fertilizer prices and high energy costs dominate concerns. This overshadows the previous looming concerns of the trade fragility and export deficit. The previously announced government payments are in the rearview mirror.

Wes Davis from Meridian Agribusiness Advisors agrees that profit margins squeezed by high input costs are the top concern.

“When we talk about the more pessimistic view of the ag economy, fertilizer prices driven by the outbreak of war in Iran is certainly top of mind,” he says.

But Davis says there have been some positive tailwinds for commodity prices over the past few months, and there’s ‘no slowdown’ in demand for animal proteins.

“Those tailwinds continue to be present,” he says.

A Fundamental “Structural Shift”

Three-quarters of the economists believe U.S. agriculture is undergoing a permanent structural shift rather than a typical cyclical phase. They cite increased competition from Brazil, changing trade policies and the rapid adoption of artificial intelligence as factors reshaping the industry for the long term.

(Farm Journal Survey, April 2026)

“I’m thinking of this one as the geopolitical and input reset,” Davis says. “What I mean by that is, where things go and how we interact with the global ag economy when this cycle or when this shift is over will be different. The way that farmers get their agrichemicals, their fertilizers, their vitamins/trace minerals for feed, their tractors will all be different.”

Davis brings up the farm bill as another example. He questions whether the structural shift in policy is moving away from supporting “commercial farm preservation” and more toward “rural economic development.” This distinction could change the long-term framing of ag policy.

While Davis’ perspective is in the majority, Langemeier offers a counterpoint. He says this today reminds him a lot of the 2014 to 2019 period when there were about six years in a row of relatively low crop margins.

“I know there are a lot of changes going on, and certainly we’re worried about the competitiveness of U.S. agriculture compared to Brazil, particularly for soybeans,” he says. “As one example, I think the AI developments actually could be positive, and so I don’t necessarily see why that would necessarily mean a structural shift that would be negative.”

Geopolitical Impacts on Input Costs

The conflict in Iran and broader Persian Gulf instability are identified as primary drivers of agriculture’s economic health. Economists are specifically concerned about how these tensions are “pinching margins” by driving up the costs of energy and fertilizer while commodity prices remain relatively low.

“The negative impact of the Iran conflict has been increased fertilizer and energy prices. I did some crop budget calculations: If you hadn’t bought your fertilizer and most of your fuel is yet to be purchased prior to the Iran conflict that’s a pretty large effect on corn break-even price. I calculate it to be 25 cents a bushel. And when your break-even price is already at $5, which is way above what the futures price adjusted for basis is this fall, that’s certainly not helping matters,” he says.

It’s not just fertilizer and fuel. It’s other input categories in row crop agriculture and livestock production as well.

Noting input prices are 15% to 20% higher than pre-COVID levels, Davis points out that prices for active ingredients have gone up 20% to 30% since the conflict in Iran started.

“This continues to exacerbate that question around how long are we going to continue to see input prices increasing?” Davis says. “The other things that are less talked about but are starting to show up in pricing data are things like low inclusion additives for livestock feeds, so things like vitamins and trace minerals are starting to show up in pricing increases as well as they are being disrupted in trade flow and a slowdown of exports from China.”

Langemeier adds to the question around input pricing increases, saying it’s unknown if the uncertainty and elevated costs will go into 2027.

Strategic Deferment of Capital Expenses

To manage tight margins, farmers are expected to prioritize paying down debt over investing in land, equipment/technology, capital improvements and labor. Machinery and equipment purchases are the top items likely to be reduced or deferred in 2026, with half of economists also warning that cuts to fertilizer and crop protection could start impacting yields.

(Farm Journal Survey, April 2026)

“The number one thing as always is farmers want to be paying down debt,” Davis says. “Equipment is going to continue to be in a trough, and my expectation is that tractor sales year over year are still going to be 10 to 15% lower this year versus last year.”

He also foresees a continued transition to generic crop chemicals for the next two years.

Davis makes a distinction regarding which farms could survive this pinch on profitability. He describes a “tale of two economies” where disciplined farms with high liquidity can still find financing to grow, while those who grew aggressively at the peak of the cycle are facing a “pullback” from lenders. This adds a layer of nuance to the “commercial viability” discussion.

Langemeier provides a sobering warning about how farmers are managing the third year of low margins. He notes a trend of farmers starting to borrow against their land (non-current debt) to cover operating expenses — a pattern seen during the 2014 to 2019 downturn. He emphasizes the urgent need for “contingency planning” and a “Plan B” for debt repayment this fall.

“Usually, farms will try to cover their owner withdrawals and repay debt before they even think about making down payments on machinery. Capital expenditures always get squeezed when cash flow is tight. That’s just the way it works. We’re in one of those situations where capital expenditures are just going to be lower, primarily machinery and buildings,” Langemeier says.