Fewer agricultural economists think the row crop side of agriculture is currently in a recession, but when you consider most major row crops are seeing four consecutive years of poor profit margins, farmers argue an agricultural recession is currently underway.
Fifty-three percent of agricultural economists surveyed in Farm Journal’s July Ag Economists’ Monthly Monitor say the row crops side of agriculture is currently in a recession, which is down from the 72% who responded that way in May.
For the 53% who think agriculture is in a recession, economists argue the poor profit margins and another year of projected negative returns mean any cash reserves are being drained.
In the July survey, economists said:
- “While the BBB will raise reference prices for the ARC and PLC, current market prices remain low, and crops went in with expensive inputs, so most producers are going to have a hard time profiting under the current conditions. Losses may be lessening but it’s a tough situation for grain producers.”
- “2025 is bringing negative returns for at least the third consecutive year across nearly all row crops, with 2026 setting up to be another negative returns year.”
- “Farmers are seeing cash flow drain and lower revenues compared to the past two years.”
The negative returns projected for 2025 and 2026 aren’t just due to low commodity prices, but the fact input prices, like fertilizer, are trending higher.
Krista Swanson, chief economist for National Corn Growers Association (NCGA), says poor profitability margins are projected for every major commodity in the U.S.
“I think the big concern, especially as we turn to looking at 2026, is that we’re talking about for almost every single crop, 2026 being at least the fourth consecutive year of negative returns, and we’re not just talking about small negative returns on average, but over $100 an acre losses, and again, that’s not accounting for crop insurance or any government payments that is specifically looking at costs and returns from those grain sales,” Swanson says.
Why Some Ag Economists Argue Agriculture Isn’t in a Recession
Additional farm program payments from Congress, along with the fact land prices aren’t declining, are two reasons 47% of ag economists argue the ag economy isn’t in a recession.
In the July survey, ag economists who say the row crop side of agriculture isn’t in a recession, gave the following reasons:
- “Farm program payments and strong corn exports. Land prices also do not appear to have declined, according to the August land report from USDA.”
- “Although prices are currently low, production prospects are very good, supporting expected crop revenue and lowering crop cost of production per unit.”
- “Prices and income are down sharply from their 2022 peak. Defining a ‘recession’ for a sector is difficult. To me, it implies a temporary downturn, but something like current prices appears more likely to be ‘the new normal’ than a temporary blip.”
- Although crop farms have been facing considerable financial challenges, so far, farm finance has been sustained by cutting down on some of their working capital. I would worry about the actual (bigger) recession possibly to come. In my opinion, tariff effects will be less likely to take place immediately in this harvest season, but the shock (without negotiation scenario) will likely hit the farm input cost first, threatening farm financial health of 2026.”
- “Government payments and crop insurance guarantees are removing the downside risk that would typically allow input costs to reset.”
Ohio State’s Carl Zulauf agrees a price squeeze is impacting margins for farmers, but a big piece of why he doesn’t think U.S. agriculture is in a recession is land values.
“It’s a price squeeze on the input prices versus the cost of the output prices,” Zulauf says. “But I think for the farm economy to be in a recession, you have to see some softening land prices both on the rental side and on the ownership side. And USDA just released on the first of August their latest land estimates, and I think a fair characterization of it is that land values were up, cash rent was stable to slightly up. That does not corroborate in my mind with a sector that’s in recession.”
USDA’s annual land survey released earlier this month shows on average, land real estate values came in at $4,170 per acre in 2025, which is a 4.3% increase from 2024.
Zulauf says you can make an argument that land values are holding steady because of government payments.
“But the point is that government payments are at least apparently keeping the land price in check,” he says. “And that’s a really big thing because of borrowing capacity and all that that goes along with asset prices.”
Not Just the Midwest and South Feeling the Financial Pinch
The latest Ag Economists’ Monthly Monitor also asked which region of the country is seeing the most severe financial pressures impact farmers.
- 38% responded the Midwest
- 15% said the Mid-South
- 8% responded the West
- 8% also said the Northwest
“The first thing I have to remind everybody is we are incredibly diverse,” says Dan Sumner, an agricultural economist with the University of California, Davis. “So the top ag commodity in California is milk. And milk isn’t doing that bad these days in terms of prices. Beef is also a huge part of our economy. So I picked the two that are doing OK. The rest of them are struggling.”
He says from tree nuts to fruit and grapes, growers in California are also struggling with lower prices and higher costs.
He says the grape industry, especially wine grapes, are struggling with a demand problem. Tariffs and the uncertainty surrounding trade is also impact tree nuts and other fruits.
“Since China used to be such a big market for them, and China, you’re dealing with the government there. So you could write down what the tariffs are, and then you write down what the government policy says to the importers, and of course they’ve got their centrally planned economy. So it’s been tough on tree nuts with the loss of that Chinese market,” he says.
What to Watch Over the Next 12 Months
Economists say trade will play a major factor in the health of the ag economy over the next 12 months. It’s not just how the tariff issues are resolved, but with which countries the U.S. is able to strike trade deals.
“What happens with trade/tariffs is likely the biggest factor now and over the next 12 months across all of agriculture. I’ve made this statement in the past, but it continues to be the biggest wild card that could boost or harm the ag sector. Another factor I’m watching in the short term is crop size,” said one economist.
When asked to outline the two most important factors that could impact the ag economy over the next 12 months, economists varied in their responses, but said:
- Trade negotiations
- Government payments and farm safety net programs
- Crop prices versus production costs
- Strength in livestock markets
- Biofuel policies
- Interest Rates
Economists say provisions within the One Big Beautiful Bill are also important to agriculture over the next 12 months.
“The two most significant drivers are the recently passed Big Beautiful Bill that will spend about $50 billion on commodity programs over the next 10 years, as well as recently announced trade deals,” said an economist in the anonymous survey. “Increased reference prices in the BBB will help support farm income, and it appears the administration is making a point of securing deals for ag as part of the trade pacts being negotiated. These both bode well for agriculture.”