The Cost of Growing

This Week In Ag #174

“It’s the economy, stupid.”

That was the famous line, crafted by political strategist James Carville, for Bill Clinton’s successful 1992 Presidential campaign. Its brilliance lay in its simplicity, focus and how it emphasized the major pain point among voters. If farmers had such a catch phrase today, it would surely be:

“It’s the inputs, stupid.”

The cost of seed, herbicides, fuel, fertilizer, feed, interest and other input costs is by far the number-one pain point of producers. Findings from a recent Purdue University survey showed 42% of farmers listed high input costs as the main factor limiting financial performance. That’s nearly 2.5 times higher than any other contributor. Input costs are the key driver for falling farmer sentiment, which just hit its lowest point of 2026 while dropping 33 points over the past 12 months.

Crop input costs for the seven major row crops hit record highs this year. So it’s not just corn and soybean growers feeling it. Rice costs had the steepest overall increase, rising $75 per acre, while peanut inputs rose $30 per acre. Nor are livestock producers immune. Sure, beef prices just hit record highs. But that works both ways. Costs of replacement heifers are astronomical, which is keeping herd sizes at record lows. Most rancher margins are already in the single digits, yet hikes in drought-related feed costs, veterinary supplies and high interest rates are further squeezing profits.

Affordability will continue to be the driving issue that farmers, retailers and agribusiness must address moving forward. The current situation is unsustainable. Yet input costs are projected to rise even higher in 2027.

So where does the blame lie?

Multiple factors are in play. Wars. Supply chain disruptions. Tariffs. Inflation. These are all significant contributors. But there’s a strong belief that something else may be happening.

Vice President of the National Corn Growers Association (NCGA), Matt Frostic, recently stated: “We are paying substantially more for our inputs. But the price gouging that is happening for US farmers is even worse than many of us suspected.”

Frostic is referencing a new study that reveals US farmers are paying quite the premium for their crop inputs compared to their chief competitors in Brazil. US farmers are shelling out double for fungicides and many herbicides, 87% more for insecticides and 68% more for seed corn. These price gaps are consistent across all farm sizes. Currency exchange has some impact, as does the fact that US farmers tend to favor branded products over generics. But even after taking this into account, the price gap is considerable.

US agribusiness has become the land of the giants. Four massive companies dominate sales of seed, chemical, fertilizer and animal health products – as well as meat packing and grain processing – holding collective market shares ranging from 60-85%.

Fair to say, this severely limits farmers’ ability to Pass Go and Collect $200.