It’s a grim reality that isn’t improving in the South. Cotton and rice producers say their balance sheets are bleeding red. After multiple years of losses, debt continues to mount, and recently announced government payments are not expected to come close to covering the financial hole farmers face again this year.
For many, the question is no longer how to make a profit, it’s whether they can stay in farming at all.
Farmers, industry leaders and economists warn the U.S. could be approaching a breaking point for cotton and rice production, with 2026 shaping up to be another year that pushes more growers out of the business. And with more farmers potentially walking away, the fear is the U.S. could be on the verge of losing those industries altogether.
“An Average Crop Doesn’t Pay the Bills”
For Charles Williams, a farmer in Crawfordsville, Ark., he’s seen what multiple years of losses can do to an industry.
“In terms of how the year ended up, it’s pretty average to mediocre,” Williams says. “But an average crop really doesn’t pay the bills, unfortunately.”
Looking back at 2025, Williams says he feels fortunate his operation was able to plant at all. Heavy flooding across the mid-South last spring forced many acres to go unplanted, compounding losses in a region heavily dependent on rice and cotton.
The flooding came at a time when acreage was already under pressure.
“I’m on the Arkansas Rice Research and Promotion Board, and I’ve seen some projections on acres,” Williams says. “In 2024, I think we had 1.4 million acres of rice here in the state. In 2025, USDA shows 1.25 million got planted. I’m kind of surprised by that number, but it’s probably some late-planted rice. We’re projecting under 900,000 acres. I think that’s the lowest acreage since 1983.”
Arkansas is the nation’s largest rice-producing state, growing roughly half of all U.S. rice. Cotton is the other cornerstone crop,but it comes with specialized, expensive equipment that leaves farmers with few alternatives.
Because these farmers have cotton equipment to pay for, equipment that can only do one thing, which is pick cotton, walking away isn’t an easy choice. Williams also is an owner of a gin.
“We’ll continue to plant some cotton, at least as much as we did last year,” he says. “Our production last year is half of what it historically is, so we’ll be 50% to 60%, maybe 65% of what we historically plant with cotton. Rice, I don’t know. There may not be a whole lot of rice grown, quite frankly.”
The Piece Not Many Are Saying Out Loud: “We’re on the Cusp of Offshoring Production”
Williams says many farmers are planting crops in 2026 knowing full well they won’t make money on them. That reality has him worried about the long-term future of U.S. production.
“I hate to think about the possibility of offshoring cotton production and rice production,” Williams says. “I think we’re on the cusp of that right now.”
That concern is echoed across the Cotton Belt.
When Gary Adams, president and CEO of the National Cotton Council, spoke to “U.S. Farm Report” last spring, he warned the industry had gone from just losing money to losing farms. Nearly a year later, he says little has changed.
“If you just look at the economics of where the market is, it’s been generally trading sideways over the last half of 2025,” Adams says. “For a lot of growers, the situation is kind of the same as it had been. You just put another year of losses on top of what had been a couple of years before that.”
Adams says conversations with farmers reveal a level of stress he hasn’t seen before. Average cotton losses in 2025 are estimated at more than $300 per acre.
“That’s the kind of numbers we’re seeing for the 2025 crop,” Adams says. “We compare that to 2024, even a little worse than what we saw in 2024, and 2023 had a loss as well, just not as large. That’s the magnitude we’re looking at when we stack up market returns versus cost of production.”
Government Aid Helps, But Doesn’t Close the Gap
Last week, USDA announced payment rates for the Farmer Bridge Assistance Program, with rice payments set at nearly $133 per acre and cotton payments just over $117 per acre.
Those payments drew criticism from soybean farmers who argue soybeans were hit harder by last year’s trade dispute with China.
Seth Meyer, who served as USDA chief economist for five years before taking a job with the University of Missouri to start 2026, was on the front lines of crafting the calculations for the Farmer Bridge Program payments. He says it’s key to understand the program is designed as economic aid, not trade mitigation.
“We started off this discussion about trade mitigation and simply tight margins and tough economic conditions to bridge us to ARC and PLC support,” says Seth Meyer, director of Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri and former USDA chief economist. “The safety net kicks in in October of this year. When folks look at some of the commodity payments, this is an economic impact. They were calculating these very similarly to ECAP, looking at shortfalls in cost of production, not trade impacts.”
Meyer says the administration was pursuing multiple strategies simultaneously while being strategic with how the program was rolled out.
“There’s been kind of two efforts,” he says. “One is putting a program out there so the Chinese can’t hold that trade impact over our head during negotiation. At the same time, we’re pursuing other trade opportunities. When we look at ongoing trade negotiations with China and the president’s supposed visit in the spring, there’s been some progress, even though the friction lasted longer than last time.”
But the Farmer Bridge payments are capped at $155,000 per individual, a limit Adams says will constrain many cotton operations.
“I do think it’s helping offset a portion of their shortfall,” Adams says. “It gives them a chance to stay in business, not a chance at a profit, a chance to stay in business, when you combine it with the higher reference prices in the One Big Beautiful Bill Act that will take effect later this year.”
He says in the OBBB, cotton’s seed cotton reference price increased about 14%, but those funds won’t arrive until October.
“There’s still a lot of weight between now and then,” Adams says. “Things can happen with the market. This serves as a bridge, but does it fill the entire hole they’re facing? No, it doesn’t.”
What it does provide, Adams says, is some reassurance to lenders.
“It gives lenders some assurance to go with them for another year,” he says. “That’s the situation a lot of growers are in.”
More Farmers Walking Away? Those Decisions Are Being Made Right Now
Even with the assistance that USDA says should hit bank accounts by the end of February, Adams says some farmers won’t make it, either by choice or because their lender won’t finance them for the upcoming year.
“Some growers will look at the markets, look at cost of production, look at what equity they still have and make the decision that that’s enough,” Adams says. “They’ll decide to get out of farming and do something else. We know those decisions are being made right now.”
When asked whether the industry expects an uptick in farmers exiting, particularly in the mid-South, Adams doesn’t hesitate.
“I think there’s a really good chance that will happen,” he says. “Whether it’s by choice or dictated by their lender, they’re taking a hard look at what equity they still have and whether they want to continue taking on that level of risk.”
Ag Lender Says Farmers Are Seeing the Most Financial Stress Since the 1980s
Greg Cole is president and CEO of AgHeritage Farm Credit Services, which serves roughly 6,700 members across 24 counties in Arkansas. Cole started in ag lending in 1984, and he told U.S. Farm Report last year that Arkansas farmers were staring at a loss on every crop they grow. He says it’s not an exact repeat of the 1980s, but it’s eerily similar.
“I can tell you this, this is the most stress I’ve seen since the ‘80s when you come to farm profitability, i.e. farmers losing money,” Cole says. “One positive we have now compared to the ‘80s is land values. Our land values are still positive, which gives some lendable equity —unlike in the 80s, when I started my career, when U.S. farmland prices plummeted in some areas up to 60%.”
With a drastic drop in commodity prices, but input prices still record or near-record high, Cole says farmers in Arkansas, specifically, have been eroding balance sheets for four straight years.
“We started seeing losses in ’22 when 40% of our producers lost money,” Cole says. “In ’23, about 50% lost money. And then last year, in ’24, 70% lost money, with the average loss of about $150 an acre. And that’s after they received about a $50 per acre ECAP payments. Today, we’re looking at where we stand now. We could have a similar level of losses in ‘25 that we had in ‘24. Even though in ’24, we had very strong yields. But now we have weaker yields.”
As mounting debt shows up on the balance sheets, Cole says there are two types of farmers seeing the most severe financial strain.
“The ones who rent most of the land, especially if they pay on the higher end of rent. And here in the Mississippi Delta, most farmers who have a lot of acres rent most of their ground,” Cole says. “And then young, beginning farmers who didn’t have the opportunity to build up a lot of equity. Those are the ones that have occurred these multiple year losses where their balance sheet debt has swollen to a level that’s hard to service a debt when you add the interest rate cost on top of it.”
What Will It Take to Turn Cotton Prices Around?
With prices still below breakeven again this year, Adams says the industry is focused on the demand side of the equation.
“Commodity markets are always cyclical,” he says. “There will be some unanticipated shock, but when we look forward. We’re really focused on demand; global cotton demand has been relatively stagnant for the last decade.”
Global consumption currently sits between 115 million and 118 million bales, down from highs of 123 million to 124 million bales. That’s why the industry is leaning into campaigns like Plant Not Plastic, highlighting cotton’s environmental and health benefits.
“We’re really focusing on cotton as a natural fiber and a healthy alternative to synthetics,” Adams says. “Microplastic microfiber pollution is in the environment, in our bodies and in our food. We want brands, retailers and consumers to be aware of that.”
Adams also points to untapped domestic demand. Of the roughly 40 million bales of fiber consumed in the U.S. retail market each year, only about 4 million bales, roughly 10%, are U.S. cotton.
Legislation known as the Buying American Cotton Act, introduced by Sen. Cindy Hyde-Smith, aims to change that by offering transferable tax credits for products made with U.S.-grown cotton.
“We hope in the next two to three weeks to have a companion bill introduced in the House,” Adams says. “This would provide tax incentives to brands and retailers that document the use of U.S. cotton. We believe that translates into additional demand and better prices for producers.”
Williams says domestic consumption is critical.
“I think we need to find ways to incentivize production as much as we can,” he says. “Beyond that, domestic consumption is something we need to be looking at. The Buying American Cotton Act is an America-first approach that could reshore finished goods. That’s what we need.”
“It’s Hang On and Hold On”
Until something changes, farmers say the pressure will continue into 2026. For Williams, the stakes are deeply personal.
“It’s hang on and hold on,” he says. “I’m going on 52 years old. I’ve got four kids, two in college and two in high school, and I need to see them through.”
For many cotton and rice farmers across the mid-South, the coming year could determine whether holding on is still possible.