WASHINGTON, DC – Farmers are facing a third straight year of declining economic conditions as crop prices remain below breakeven and fertilizer and fuel costs add pressure. American Farm Bureau Federation economist John Newton says the downturn has now reached 12 consecutive quarters.
Farm production expenses have increased by $120 billion, or 34 percent, since 2020 and are approaching $500 billion annually. Newton reports crop prices remain 11 to nearly 40 percent below recent highs, eroding working capital and increasing borrowing needs.
The Kansas City Federal Reserve’s farm income index fell to 66 in the first quarter. Loan demand is near record levels, while weak farm equipment sales show producers are delaying major purchases as cash flow tightens.
Farmland values remain a source of balance-sheet strength, providing collateral and limiting broader financial stress. However, land equity does not automatically provide the operating cash needed to cover current production costs.
Newton says Senate action on year-round E15, the farm bill, and possible economic assistance could provide additional support for farm income, commodity demand, and rural businesses.
Farm-Level Takeaway: Farmers face a deepening cost-price squeeze, while pending policy decisions could affect cash flow and market opportunities.