Leading agricultural economists and industry experts are emphasizing what most farmers have already taken to heart about 2026 expenditures: Spend only where you can identify a clear, realistic path to higher returns or lower costs sooner than later.
The key, according to University of Illinois agricultural economists Gary Schnitkey and Nick Paulson, is filtering potential projects through the sharp lens of your operation’s current financial health. Return on Investment (ROI) and cash flow must come first, while tax benefits and “nice-to-haves” are a distant second.
Start With These Two Questions
Before signing a check for any major project, the economists encourage farmers to ask themselves:
- Will this clearly lower my cost per acre or raise my average returns in the next three to seven years?
- Can my working capital handle the expense if commodity prices or returns are worse than expected?
“You have to look at your cash flow and your working capital,” says Schnitkey. “You have to be disciplined. If you’re not in [a good] financial position, then this isn’t the time to do it.”
He advises farmers to prioritize speed of ROI, given the current economic environment. “I would suggest that in this point in time you want to be looking at investments that have a quicker return,” he says.
Ryan Thompson, strategic accounts manager for AGI, echoes Schnitkey’s focus on payback.
“If I’m going to spend a few dollars, how fast is that money going back to my pocketbook?” he asks, capturing the essence of investment mandates for this year.
Thompson also says to evaluate infrastructure decisions through the lens of longevity: “If I’m in my twilight years of my operation, five years or less left, maybe I’m not making that investment. But if I’m 45 or less, going to be in it for another 20-plus years, that’s something that makes sense to me.”
Paulson urges farmers to do risk assessments: “What’s the likelihood that it won’t work out, and what’s the risk you run that something doesn’t pencil out like you think it will? What sort of position does that put the business in?”
While most spending on the farm should be defensive this year, two categories are flagged by Paulson and Schnitkey as being strategic “yes” opportunities: drainage tile and grain storage.
Strategic Drainage Tile Installation
Drainage tile is one of the few infrastructure moves that qualifies as an “offensive play” in an otherwise defensive year, the economists say.
The core benefit of tile installation is supported by strong research showing meaningful yield gains, often in the near term.
“There is good research out there that shows there are some pretty significant crop yield improvements, even in relative short run, and that does translate to positive returns on the investment required for drainage tile,” Paulson says.
The economists point out that tile can be a powerful risk management tool. Potential benefits include:
Improved timeliness of planting and harvesting by firming up fields sooner after rain, a critical benefit when planting windows are tight.
Reduced yield variability across a field, turning problem areas into more reliable yield contributors instead of chronic underperformers.
Enhanced long‑term profitability on owned or long‑term “controlled” ground, because the yield gains and better timing are able to compound over many seasons.
Paulson and Schnitkey say they believe tile installation makes the most economic sense this year on chronically wet, yield-limited acres that a grower intends to farm for the long haul—and only if the operation has the financial cushion to absorb the upfront cost until yield gains materialize.
Grain Storage Installations And Updates
While a new, permanent steel bin has been a sound long-term asset for farmers in recent years, the experts say today’s high construction costs mean a new build only pencils out for farmers planning to run their operation for the next 15 to 20 years and who can consistently fill and turn that capacity.
It’s why Thompson says the smart money this year is likely on upgrading existing storage facilities to protect margin.
“In the past year we saw a lot of folks make upgrades to their existing grain bins, whether that was putting in new floors, new unloads, updating the fans and vents, things like that,” he says.
Making these types of upgrades deliver payoffs such as improving airflow, allowing you to dry and cool grain faster and cheaper and cut down on harvest bottlenecks and, in some cases, reduce labor costs.
High-Impact: Bin Monitoring Technology
Thompson notes that a high-impact, cost-effective upgrade farmers are making now is improving their bin-monitoring system to minimize spoilage loss, over-drying or other factors that contribute to quality discounts.
“We don’t have a lot of room for error… keeping that grain in good condition can be key to trying to squeeze out any profit,” Thompson says, noting how increasingly volatile weather makes grain conditioning more critical than ever.
He says modern bin-monitoring systems use real-time data to guide fan use, preventing unnecessary energy use (avoiding over-drying) and saving real dollars sometimes lost in shrink and fuel consumption.
Caution Offered On Bags Versus Bins
Some row crop growers are looking to temporary grain bags as a cheaper alternative to steel bins, but experts like Thompson urge caution. “If you’re looking for short-term return, maybe [go with] a bag. But again, how does that fit into your long-term plan for the operation?”
He adds, “There’s still that inherent risk … when that grain is in a bag, whether it’s in my yard or 20 miles down the road in the field where I left it, from all the things that can happen to that bag, and also all that grain is on the ground.”
Paulson, Schnitkey and Thompson were featured speakers during an Illinois Soybean webinar titled “Reevaluating Your On-Farm Investments.” The webinar was part of a three-part economic series to help farmers navigate current economic challenges.