Pickin’ Time or Payout Time? The Reality of Fall Harvest

This Week In Ag #132

Fall is typically an exciting time on the farm. Whether it’s fruit, vegetables or grain, fall is, as Johnny Cash famously sang, “Pickin’ time.” Farmers usually can’t wait to climb into their combines and intently stare at numbers flashing upon the yield monitor. Or sort and weigh their crates of produce. But lately, autumn has signaled anything but excitement. Farmer sentiment dropped 10 points last month, dipping to the lowest point since last September. Granted, it’s still well above the sentiments recorded over the past four Septembers, but farmer expectations are moving in the wrong direction. And for good reason. Last week USDA raised its projected 2025 farm production expenses by $17 billion. That would set a record of $467 billion. Within this number, cost components of labor, interest, maintenance, taxes, marketing and livestock all set record highs (fertilizer actually dropped 1% YOY).

What’s even more astounding: this year’s overall crop input costs even eclipse that of 2022, when urea peaked at over $1,000/ton and anhydrous ammonia went for $1,600/ton. Of course, that’s when corn and wheat prices were also trading for double what they are today. USDA also just lowered net cash farm income – a main indicator of farmers’ cash flow – by $13 billion, about 7%, over previous forecasts. Still, USDA projects net farm income to jump 40% over last year, to $179.5 billion. That would be the second-highest on record. How can that be, you say?

Numbers never lie. But they can mislead. When it comes to the farm economy, prosperity rests on what side of the fence you’re on. Led by the burgeoning cattle market, livestock receipts are expected to grow by $30 billion (11%). The rest of 2025’s expected growth is due to a quadruple increase in government subsidies, to the tune of $40 billion (and look for more to come). Then there’s the crop production segment. Those cultivating the nation’s largest crop are expected to lose an average of $161/acre this year. What makes this especially devastating to the ag industry is the sheer footprint of corn. That encompasses 526,000 farmers canvassing over 97 million acres. Like it or not, as corn goes, so does much of the ag industry. As the biggest user of crop nutrients, corn also drives the fertilizer business. It accounts for over two-thirds of all nitrogen usage, and over half of all P and K.

If these numbers sound depressing, wait until next year. Input costs for growing corn are expected to reach $916/acre – just below the record levels of $928 in 2022 – and return an average loss of $181 per acre. All of this makes our grandfather’s method of diversification – with farmers raising multiple crops and livestock – sound anything but antiquated.