America’s farm recession is here. One early response is sending billions to Farmers.
Patrick Thomas
6 min read
In northeastern North Dakota, Greg Amundson’s 3,000-acre farm this year produced corn, soybeans, canola and rye. It also produced thousands of dollars in losses.
A bag of corn seed cost Amundson roughly $150 a few years ago. Now he has a hard time finding one for less than $230. Earlier this year it took three weeks to fix a mechanical problem on his combine that broke down during harvest, resulting in a four-figure repair bill.
“Everything is so expensive,” Amundson said. “It’s killing us.”
Some farmers anticipate a boost from a multibillion-dollar bailout attached to a federal spending bill this week. Disputes over identifying offsetting cuts for new spending temporarily imperiled the aid and threatened a government shutdown, but the House and Senate approved the measure and it now goes to President Biden’s desk for his signature.
America has long provided subsidies to its farmers, dating back to the 1930s as a way to tackle rural poverty when a quarter of the population lived on farms. Today, subsidies largely come in the form of insurance that enables farmers to secure loans needed to grow crops. Direct cash payments, while at times controversial, have been used to bolster farmers during agricultural downturns.
The U.S. farm sector finds itself in another rough patch. Net farm income declined 4% this year to $141 billion after falling about 20% last year, according to the Agriculture Department. Weaker prices for commodities such as soybeans and wheat have weighed on farmers’ earnings after growers in the U.S. and elsewhere reared big crops, swelling supplies. Their costs for essentials such as fertilizer and equipment are also higher.
“The ag industry is continuing to get weaker,” Damon Audia, chief financial officer for farm-equipment maker Agco, said at a December investor meeting.
Those challenges are expected to continue next year. Some of the world’s largest grain shippers and pesticide suppliers are girding for a shrinking farm economy by cutting costs or laying off workers. Per-acre losses for corn growers are expected to be steeper in 2025 than the prior two years, according to the National Corn Growers Association, a trade group.
Agco tractors at the National Farm Machinery Show in Louisville, Ky., in 2022. Farmers’ costs for essentials, such as fertilizer and equipment, are rising. - Luke Sharrett/Bloomberg News
President-elect Donald Trump has also pledged tariffs on Mexico and China, key importers of U.S. crops, and Canada, a major fertilizer producer. Government policies that subsidize biofuel production, which can boost crop prices for farmers, could also be in flux under the new administration, analysts and company executives said.
Agriculture trade groups are circulating lists of requests to lawmakers extending beyond direct payments that could buffet against the current market slump.
Persistent challenges
Financial pain on the farm comes after one of the ag industry’s strongest runs on record. Grain prices soared during the Covid-19 pandemic in 2021 and again in 2022 after Russia invaded Ukraine, one of the world’s top breadbaskets. The war pushed up prices for wheat and corn, contributing to rising global food prices. It also pushed net farm income to a record in 2022, the USDA said.
Since then, grain exports have resumed via the Black Sea, and better weather in key growing regions in South America helped bolster global crop supplies, pushing prices down.
In Iowa, the top corn-producing state, farmland values decreased by 3% this year, breaking a five-year streak of rising prices, according to an annual survey by Iowa State University. Farmland value often represents the largest portion of a farmer’s assets, making up roughly 80% of their total wealth, according to the USDA.
Agriculture giant Bayer, maker of the world’s most-used weedkiller, Roundup, cut its full-year earnings forecast in November as farmers pulled back spending on some seeds and pesticide products.
Grain traders such as Cargill, Bunge and Archer Daniels Midland have also been under pressure, posting sharply weaker sales or profits. The companies buy and store crops, sell commodities to food makers and governments and run plants that turn corn and soybeans into fuel and cooking oils.
Cargill, one of the world’s biggest privately held companies, said earlier this month that it is laying off 5% of its global staff, or roughly 8,000 workers. Cargill reported $160 billion in revenue in its most recent fiscal year, compared with $177 billion the prior year.
Shares in St. Louis-based Bunge and Chicago-based ADM have both fallen by more than a fifth this year. Bayer’s stock, which trades in Germany, is down about 40% over the past year.
The Canadian headquarters of global commodities trader Cargill in downtown Winnipeg. Cargill said earlier this month it is laying off 5% of its global staff, or roughly 8,000 workers. - Ed White/Reuters
Big impact
In North Dakota, Amundson is holding off purchasing fertilizer for next year’s crop, hoping that prices will come down. One thing he isn’t concerned about: tariffs in a Trump administration.
“Everyone hears the word tariff and everyone gets all afraid,” he said. “American farmers are getting screwed now because of how lopsided trade is.”
Trump’s election lifted many farmers’ spirits, and some believe that his policies may benefit the agricultural economy, analysts say. In 2018 and 2019, during Trump’s first term, about $23 billion in taxpayer money was paid to farmers to offset the impact of trade disruptions.
The latest federal spending bill called for $10 billion of support to farmers. The bill also includes about $21 billion in natural disaster aid for farmers and ranchers affected by drought, wildfires and hurricanes over the past two years. Agricultural groups are also looking for other means of support.
Some companies and industry trade groups are calling on the Trump administration to restrict used cooking oil imports from China and increase the use of U.S.-produced soybean oil in biofuels. Farm groups are also lobbying for expanded use of corn-based ethanol in aviation fuel.
“That could have a pretty big impact on the farm economy,” said John Neppl, Bunge’s CFO, on a recent investor call.
The farm economy hasn’t gone bust for everyone. Profits are booming for poultry processors like Tyson Foods as their biggest expense—grain used to feed chickens—plummets.
Shares in seed and pesticide maker Corteva are up 20% over the past year, helped by the growing popularity of its Enlist-branded crop seeds. Chuck Magro, chief executive of the Indianapolis-based company, said that the farm economy is mixed, with some growers willing to spend more on cutting-edge seeds to boost harvests while prices are low.
Even if Trump’s actions spur another trade war, Magro says it is unlikely farmers will cut production.
