Concerns about farm profitability, borrowing costs, and input expenses are growing among agricultural economists as they look ahead to the second half of 2026, according to the latest Farm Journal Ag Economists’ Monthly Monitor released on June 2.
Seventeen economists participated in the May survey conducted by Farm Journal. The findings indicate that higher interest rates remain a major concern, with expectations of reduced capital investment and increased financial stress for highly leveraged producers. Input costs, exports, land values, water availability, and farm loan demand were identified as top indicators being monitored.
A key finding from the survey is that 40% of responding economists believe many farms will require significant restructuring to remain viable if current crop prices and input costs persist. Only 33% think producers can maintain their current operational structures under existing conditions. This sentiment contrasts with a recent Farmer and Rancher Sentiment Survey by Farm Journal showing that 43% of farmers describe their financial condition as “good.” One economist commented, “With recent tight financial conditions in the farm sector, it will take a tangible positive improvement in farm finances to see much investment in agricultural capital purchases.” Another respondent said, “I feel like we will start seeing things shift to very bad in two years if we do not see an up year quickly.”
The impact of interest rates is particularly acute. More than half of respondents identified reduced capital investment as a likely consequence for agriculture due to another expected rate hike before year-end. An equal percentage warned that higher debt-servicing costs could create a breaking point for young or highly leveraged operations. “The system can continue to function if farmers are well capitalized,” one economist wrote. “Many are profitable but may not have the cash on hand to operate without the loans. If access to cash were to pull back, it would be highly detrimental for farmers.”
Economists also remain skeptical about legislative progress on permanent year-round E15 sales despite strong support from ethanol groups and many agricultural organizations; nearly 60% said passage this session is unlikely or highly unlikely.
Ben Brown from University of Missouri Extension pointed out that while U.S. producers face high borrowing and fertilizer costs, competitors such as Brazil encounter even steeper financing burdens due to higher interest rates there—a situation he says could open opportunities for U.S. corn and soybean exports later this year or into 2027.
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