A Familiar Story: Margins Squeeze, Resilient Farmers

This Week In Ag #148

New year, same news. That seems to be the case with the farm economy. US farmers are now facing the widest gap in a decade between what they pay to produce a crop and what they earn from selling it. USDA revealed that the” prices paid” index is now 154.6, compared to a “prices earned” index of 120.5. Indexes are measured in terms of 2011 levels, which are set at 0. Over the past decade and a half, “prices paid” have risen 50%, while “prices earned” have risen just 21%. That’s the pure definition of squeezing margins.

These “prices paid” numbers show no sign of declining. Crop input costs are projected to rise again in 2026 by about 5% for both corn and soybeans. This would put costs just below the record 2022-23 levels, when crop prices were about twice as high as they are now.

New year, same news also applies to farmer attitudes. Purdue’s Farmer Sentiment index for December was exactly where it was a year ago, despite economic conditions worsening. Sentiment did lower slightly from November, but at an index of 136, it’s still tied for the third-highest December in the past 11 years and well above the overall median.

Despite the gloomy economic indicators within the farm economy, 75% of farmers feel that in the US as a whole, “things are heading in the right direction.” That’s the highest it’s been since that question was asked last summer.

I saw first-hand evidence of positive attitudes last week. At the National No-Till Conference, I moderated two large discussion groups and spoke to dozens of farmers at our booth. The farmers I heard from were eager to learn of new ways to improve their operation, perhaps more open-minded than ever. In the micronutrients session, experienced users were seeking ways to refine their system. These discussions centered around timing. Non-users were asking for the best ways to incorporate micros. My advice was to apply a multi-pack at planting, in-furrow if possible. The seasoned users agreed. In the nitrogen sessions, growers were looking for products and methods to improve efficiency. Timing, especially with split applications, dominated the discussion. But in neither session did I get the sense that growers were looking to arbitrarily cut rates.