The U.S. farm economy is currently in the 12th consecutive quarter of a farm economic downturn, and given the cumulative effect of inflation, new economic pressures on input costs such as fertilizers and fuel, and crop prices below breakeven, how long the current downturn lasts will depend a lot on congressional action in the coming weeks and months.
According to the most recent data from the Kansas City Fed’s Agricultural Credit Survey, the farm income diffusion index — which measures the year-over-year change in economic conditions — was 66 in the first quarter of 2026, marking three straight years of deteriorating economic conditions on the farm and the longest downturn since that began in 2013 and lasted until 2020-2021.
The current downturn has been building for several years. The inflationary period that began in 2021 dramatically increased the cost of doing business on the farm. Farm production expenses have risen sharply, with total expenses up 34%, or $120 billion, since 2020 and annual gross farm production expenses now approaching a half trillion dollars nationwide.
While major crop prices are expected to rebound slightly in 2026, prices for this year’s crops are anywhere between 11% and nearly 40% below levels reached only a few years prior. This price-cost squeeze has resulted in an erosion in working capital, near-record demand for loans and, in some cases, farm bankruptcies.
Read more here: https://www.fb.org/market-intel/farm-economy-policy-solutions-within-reach
