Row crop farmers across the U.S. are facing a financial environment that leaves little room for error. Rising production costs, persistently high interest rates and commodity prices that have failed to keep pace are combining to pressure margins at nearly every level of the operation.
From the ag lending perspective, Alan Hoskins, president and national sales director at American Farm Mortgage and Financial Services, says the current cycle is forcing producers to rethink not just their numbers, but how they approach decision-making altogether.
During the 2026 Top Producer Summit, Hoskins says both farmers and ag lenders need to remember there’s a clear differentiation between profit and cash flow. And he says when it comes to cash flow, that’s something farmers should be looking at on a monthly basis.
“There are definitely a fair number of challenges out there,” Hoskins says. “When you look at 2026, the numbers don’t have the appearance of being better than what we saw in 2025.”
Input Costs Lead the Pain
Among the many pressures facing producers, Hoskins says higher input costs remain the most immediate and widespread challenge.
“Over the past few months, the increase in input costs is a significant driver in what we’re seeing across agriculture,” he says. “Commodity prices being where they are certainly contributes to that as well.”
Hoskins notes that while producers are keenly aware of rising costs, marketing decisions can sometimes compound the problem. In volatile markets, hesitation to price grain can leave margins exposed.
“There are times where there’s a little bit of inertia on the part of producers to take advantage of sales opportunities when they present themselves,” he says. “There’s always the hope that the margin will improve, but that’s exactly where a written marketing plan becomes extremely valuable.”
A marketing plan, Hoskins says, helps remove emotion from pricing decisions and provides structure during uncertain times.
Where Farmers Still Have Levers to Pull
Despite the headwinds, Hoskins believes producers still have meaningful opportunities to manage costs — particularly by scrutinizing inputs more closely.
“Looking at fertility levels across different farms and making sure you’re applying the proper amounts of fertilizer is one place to start,” he says. “Every field doesn’t necessarily need the same approach.”
He also encourages producers to evaluate field operations carefully, weighing whether a tillage pass truly adds value compared to alternative chemical applications.
“These are the kinds of decisions that, taken individually, may not seem significant. But collectively, they can have a real impact on the bottom line,” Hoskins says.
Insurance is another area he believes deserves renewed attention.
“With the increases we’ve seen in equipment values and real estate values, it makes sense to revisit property and casualty insurance,” he says. “There may be opportunities to adjust coverage levels and capture some savings without increasing risk.”
Financial Stress Is Real, And It’s Growing
From a lender’s vantage point, Hoskins says the financial strain facing row-crop producers is increasingly visible. While not every farmer lost money in 2025, many operations ended the year with thinner working capital and less flexibility.
“Were there producers who made it through 2025 without losing money? Yes, but they were more the exception than the rule,” Hoskins says.
Looking ahead, he doesn’t expect conditions to ease quickly. That makes proactive planning and communication critical.
“When challenges exist, don’t try to solve them on your own,” Hoskins says. “Use the resources available to you: your lender, your accountant, your advisers.”
He cautions against reacting too aggressively in ways that could harm long-term viability.
“The goal is to weather this cycle,” he says. “It’s not to cut the meat completely off the bone and compromise your ability to operate when conditions do improve.”
Adjustment to Higher Interest Rates
Higher interest rates remain a sticking point for many producers, particularly those accustomed to historically low borrowing costs. Hoskins says perspective is important.
“While rates are much higher than what we’ve been used to over the last 25 years, if you look historically, they’re not that far out of line with the last 40 or 50 years,” he says.
The bigger challenge, he adds, may be mental rather than mathematical.
“We were in a very low-rate environment for a long time,” Hoskins says. “Adjusting to today’s rates requires a shift in expectations.”
To adapt, he advises producers to closely examine their borrowing structure across operating loans, equipment financing and real estate debt.
“If you’ve got debt that’s been out there for 12 or 18 months, there may be opportunities to restructure,” he says.
He also encourages producers to take advantage of low- or zero-percent financing options on inputs when available and to maintain open communication with lenders.
“Your interest rate is a product of your risk profile,” Hoskins says. “Having honest conversations with your lender helps you understand where you stand and what options you have.”
Are More Farmers Exiting?
With margins compressed and financing tighter, Hoskins says some producers are choosing to exit the business, but for different reasons.
“There are producers looking at 2026 and even 2027 and saying, ‘I don’t see things improving materially,’” he says. “They don’t want to see any more working capital erosion or equity erosion, so they’re making that decision on their own.”
At the same time, Hoskins acknowledges others may not have a choice.
“There will be producers who are unable to obtain the funding they need to go another year,” he says. “In those cases, the decision to step away isn’t voluntary.”
Still, he does not expect a widespread collapse.
“I wouldn’t characterize this as something that’s going to be across the board,” Hoskins says. “But with the challenges we’re facing, we will see examples of both.”
Mindset Matters As Much As Math
While financial statements tell part of the story, Hoskins believes mindset plays an equally important role in determining how producers navigate difficult cycles.
“The key truly has nothing to do with numbers,” he says. “It has everything to do with mindset.”
Hoskins encourages producers to define clear goals, not just for the coming year, but over a longer horizon.
“What are your one-year goals? Your three-year goals? Your five-year goals?” he asks. “Having that longer-term perspective changes how you view short-term challenges.”
He believes producers who approach decisions with a clear sense of priorities tend to make more measured, sustainable choices.
“When you understand your priorities as people first and foremost, you start looking at the financials differently,” Hoskins says. “That ultimately leads to better decisions.”
USDA Numbers Confirm the Reality
USDA issued its first net farm income forecast for 2026 just last week, but the bigger surprise was the fact the agency revised its net farm income forecast for 2025, showing sharper declines than earlier estimates. Hoskins says those revisions align with what they are seeing on the lending side.
“It doesn’t surprise me that USDA lowered 2025 farm income,” he says. “As more data becomes available, it gives a clearer picture of where reality really lies.”
While the outlook remains challenging, Hoskins stresses agriculture has endured difficult cycles before.
“We’re not going to lose all of America’s farmers and ranchers,” he says. “But we do have challenges within this industry that need to be addressed.”
For producers willing to plan ahead, stay disciplined and lean on trusted advisers, Hoskins believes there is still a path forward, even in one of the tightest margin environments in recent memory.