By P.J. Huffstutter, Karl Plume and Julie Ingwersen
CHICAGO, Jan 15 (Reuters) - Across the U.S. farm belt, these have become depressing times. Farmers are facing another season of low prices, high costs and difficult decisions about how — or whether — to keep operating. Banks are cutting off some growers just as they urgently need cash. Thousands of workers are losing jobs as meatpacking plants close and farm equipment makers scale back.
Strain inside the U.S. farm economy is mushrooming across rural America, from unsold tractors sitting on dealer lots to agribusiness companies reporting shrinking earnings, as abundant grain supplies weigh on markets.
Crop prices have been weak and production costs high for three years now. This year is shaping up to be equally grim, according to interviews with producers, farm economists and industry trade groups. And this week's final government crop data showed higher output than expected while corn inventories reached a December record: another red flag signaling low crop prices and farm profitability.
Any turnaround now rests on a fragile chain of events, they said, including a resolution of President Donald Trump's trade wars, renewed buying from China and more favorable domestic biofuels policies. U.S. farmers would also benefit from unfavorable weather in rival grain-producing countries.
"You talk to farmers and they say, 'I don't know what I'm going to do'," said Sherman Newlin, an Illinois row-crop farmer and market analyst with Risk Management Commodities. "I know banks that are turning away farmers, and farmers saying they can't pay back last year's operating note. It's pretty depressing out here."
U.S. farmers produced massive corn and soybean harvests this past fall, adding to a global glut of grain. Soybean farmers also missed out on billions of dollars in lost sales to China, by far the world's top soy buyer.
Chinese animal feed producers turned instead to South American suppliers to avoid tariffs imposed by Beijing on U.S. imports in retaliation for Trump's tariffs on China. Farmers have welcomed Trump's most recent $12 billion aid package, but producers and economists said these funds will fall short of reversing the damage from low crop prices and lost export opportunities.
As financial pressure builds, farm groups are lobbying for clearer long-term direction on biofuels and for trade policies that help them expand exports. The message from rural America is increasingly blunt, said economists: If policymakers want farmers to keep planting into low prices and high costs, they need to offer more than temporary relief.
Production costs, especially fertilizer, are expected to remain elevated for yet another year of painfully high input bills. Access to credit is tightening, making it harder for farmers to secure short-term loans needed to buy supplies and plant their spring crop.
"The inputs are going to be astronomically high," said American Soybean Association president Scott Metzger. "It's going to cost more to plant crops this year."
UNPROFITABLE CROP
That squeeze is expected to persist, particularly for row-crop farmers. The U.S. Department of Agriculture forecasts that total production costs for corn will rise about 3% in 2026 from 2025, while soybean costs are projected to increase 3.1%.
At the same time, average farm prices for corn harvested this past fall and marketed this year were estimated at $4.10 a bushel and soybeans at $10.20 a bushel - both down from 2023 levels, according to the latest USDA data.
Based on the USDA's preliminary 2026 yield outlook, and the agency's latest cost-of-production estimates, farmers would need corn prices of $5.03 a bushel and soybean prices of $12.80 a bushel simply to break even, according to a Reuters analysis of USDA figures.
"It's very similar to last year, in that there really isn't a crop you can point to and go, 'There's a profit opportunity'," said Iowa State University agricultural economist Chad Hart. "Everything is underwater right now."
Lenders are growing more cautious. CoBank, one of the largest U.S. agricultural lenders, said credit quality in its loan portfolio deteriorated in the third quarter and was wary of weak commodity prices and elevated input costs.
It recorded $129 million in provisions for credit losses through the first nine months of 2025, up sharply from $6 million a year earlier. As some customers could not pay their bills, the bank wrote off those debts and stockpiled emergency funds for loans it expected could fail next.
FINANCIAL PAIN
The extent of the financial strain is not yet known, partly because a 43-day government shutdown last year delayed federal data needed to assess farm income, debt and balance sheets, economists told Reuters. For some operators, particularly row-crop farmers, time has already run out.
U.S. court records showed 293 farmers or farm operations filed for Chapter 12 bankruptcy in the first nine months of 2025, nearly 36% more than the total number of such filings in all of 2024.
Bankruptcies are typically a lagging indicator of financial stress, and the cases represent a tiny portion of U.S. producers. But Chapter 12, which was designed to help farmers restructure debt and stay in business, is now leading to more farm liquidations, said Joe Peiffer, an Iowa-based farm bankruptcy attorney. With crop prices low and production costs high, there's no way for some of these producers to stay solvent, he said.
Meanwhile, tractor sales last year were down nearly 10% from a year earlier, while combine sales plunged more than 35%, according to the Association of Equipment Manufacturers.
Many farmers are instead pushing older machinery to last longer. Terry Griffin, an agricultural economics professor at Kansas State University, analyzed U.S. Fire Administration data and found that as farm incomes fell in recent years, the number of combine fires in Kansas surged.
"It's like if you have an old car and don't have the money to keep it up, you stop changing the oil or keeping it clean," Griffin said. "You need money to maintain your equipment."
RURAL JOB LOSS
Deere & Co. has laid off more than 2,000 employees across eight U.S. factories since 2023.
Rival equipment makers AGCO and CNH Industrial have also reduced payrolls. AGCO said in mid-2024 that it planned to cut about 6% of its workforce, which at the end of 2024 stood at 24,000. CNH announced hundreds of layoffs across Minnesota, North Dakota and Wisconsin last year, citing weak demand and higher material costs tied in part to Trump's tariff policies.
Rural America could also lose more jobs at schools, hospitals and local government agencies that many rural families rely on to pay bills and buffer bad years on the farm, said University of Illinois Urbana-Champaign economist Jonathan Coppess.
Steep Medicaid reductions and cuts in health insurance could increase the number of uninsured patients and strain rural hospitals, while some states run by Democrats could struggle with Trump's freeze in child care subsidies and family assistance funds.
"This is more than layoffs at Deere plants, which will impact specific communities," Coppess said. "There's a much bigger hammer coming down on rural America."
(Reporting by P.J. Huffstutter, Karl Plume and Julie Ingwersen in Chicago; Editing by David Gregorio)
