The farm economy the 2018 farm bill was written for no longer exists, argues a Market Intel analysis by American Farm Bureau Federation economist Faith Parum, written with the American Bankers Association, American Soybean Association, Farm Credit Council, National Association of Wheat Growers, National Corn Growers Association, National Sorghum Producers and USA Rice. Since then farmers have been through a pandemic, supply-chain disruption, historic inflation and rapidly rising interest rates, and the cost of producing food, fibre and fuel has risen substantially.

The clearest measure is the gap between what farmers pay and what they receive. USDA's index of prices paid by crop farms for inputs rose from 110.8 in July 2018 to 153.4 in July 2026, more than 38%; the index of prices received for crop products rose from 86.5 to 107.0, about 24%. Total US farm production expenses rose from about $343 billion in 2018 to a projected $492.8 billion in 2026 — nearly 44%, or about $150 billion — and even in 2026 dollars the real increase is more than $47 billion, nearly 11%, spread across fertiliser, fuel, labour, machinery and more.

Debt has grown with those capital needs: total farm-sector debt stood at about $402.6 billion in 2018 and is forecast at $605.1 billion in 2026, up about 50%, with both real-estate and non-real-estate debt expected to rise this year. Borrowing costs more too — interest expenses rose from about $20.7 billion to a projected $33.8 billion, nearly 63%. Debt is not in itself weakness in a capital-intensive industry, the analysis notes, but more debt at higher rates raises servicing requirements and exposure when margins tighten.

Land has been the strong side of the balance sheet. Average US cropland values rose from about $4,130 an acre in 2018 to $6,020 in 2026, nearly 46%, and farm real estate averages $4,500 an acre. That lifts equity and borrowing capacity, but land is not liquid — a farm can look stronger on paper without the cash to cover operating costs or service debt — and higher values and cash rents (up from about $138 to $160 an acre, roughly 16%) make it dearer for beginners to enter and for operations to expand.

"The result is an agricultural economy that requires significantly more capital to operate than it did in 2018," the analysis concludes, calling on Congress to pass a five-year farm bill this year that reflects today's costs, risks and financial realities rather than those of nearly a decade ago.

Source: American Farm Bureau Federation