Ag Leaders Steve Bruere and Dr. Dave Muth: $100 Oil, $6 Corn, and Cuts to Farm Subsidies

Crude oil prices took a 10-15% dip this week following the mid-terms elections. Perhaps, some of the fall was due to Vice President J.D. Vance blaming the war with Iran for Republicans’ huge losses in congressional races.

The markets may expect that Democrats – who will hold sizeable majorities in both the U.S. House of Representatives and the U.S. Senate when the new Congress takes over in January – will push President Donald Trump to end the war, which could bring stability to the global oil market.

Higher Crude Prices, Higher Corn Prices

Rising crude oil prices could bring a revenue boost to farmers through higher corn prices. But as the national debt approaches $41 trillion, farmland experts are beginning to question how long the federal government can continue supporting agriculture with billions of dollars in payments.

For farmers, rising oil prices can be a double-edged sword.

Higher energy prices mean more expensive diesel fuel, fertilizer, and other inputs. But they also can create something farmers desperately need: higher commodity prices.

That relationship is getting renewed attention as geopolitical tensions involving Iran put energy markets on edge. And according to Peoples Company Vice President Dr. Dave Muth, history suggests farmers shouldn't focus exclusively on the higher costs associated with rising crude oil.

There may be a significant revenue opportunity, too.

"When (the U.S. and Israeli war with) Iran started (in February) and the headlines were really driving towards stress on farmers around costs of production, it kind of like, yeah, there's a revenue enhancement story in here when we start thinking about global commodity price inflation," Muth said.

Muth and Peoples Company President Steve Bruere examined the historical relationship between global crude oil prices and global corn prices, going back to the beginning of 2000.

What they found might surprise some people.

What Happens to Corn When Crude Tops $100?

Muth said that during the 54 months when global crude oil prices exceeded $100 per barrel, global corn prices were at least $6 per bushel during 42 of those months.

In other words, there were only 12 months when oil was above $100, and corn wasn't also at least $6.

"So, when we see these sort of energy inflationary kinds of dynamics, we need to pay attention to the fact that there's a revenue uplift," Muth said.

That doesn't mean farmers immediately benefit when oil prices rise. Higher fuel and input costs can hit farm budgets before higher commodity prices translate into additional income. Timing matters, particularly for producers who have already purchased inputs or committed to production costs.

But the historical relationship offers an important reminder: Energy inflation doesn't necessarily mean bad news for agricultural revenue.

Muth also examined global crude oil prices alongside Iowa farmland returns. Historically, Iowa farmland has demonstrated one of the strongest relationships between commodity markets and land returns among all 50 states.

What Drives Farmland Values?

Bruere said the connection is particularly important for landowners trying to understand what drives above-average returns.

"What we see is if you own farmland in Iowa and you want an above average return year, total return year, 12 months prior, you wanted a global oil price sum," Bruere said. "That connection, that correlation is really tight."

He summarized the historical relationship with a simple observation: "If you have $100 crude, you have $6 corn."

It's an intriguing formula, particularly for farmland owners trying to determine whether today's energy market could eventually translate into stronger agricultural income and land values.

But Bruere sees another issue that could have a much longer-lasting impact on agriculture.

And it has little to do with oil.

Future Farm Subsidies

He's increasingly concerned about the federal government's ability to continue making billions of dollars in farm support payments while the national debt continues to grow.

Recent government payments, including additional assistance tied to production costs and diesel prices, have provided an important financial cushion for farmers. But Bruere wonders whether agricultural producers have become too dependent on Washington.

How Much Farm Income Depends on Government Assistance?

He pointed to estimates showing approximately $150 billion in net farm income for 2025 across crop and livestock agriculture. Of that amount, he believes roughly $80 billion to $90 billion came from government subsidies and other support payments.

If those figures hold, government assistance represents an enormous share of the financial foundation supporting American agriculture.

"So, this whole thing's kind of propped up right now by those payments that we keep getting," Bruere said.

His concern is what happens if Washington eventually decides it can no longer afford them.

Bruere believes the financial markets may eventually force politicians to make difficult decisions about federal spending with the country’s debt climbing nearly $2 trillion over the past fiscal year.

"And if you believe that we're going to get serious about fixing our national debt at some point, you know what programs are in jeopardy?" he asked.

For decades, farm programs have enjoyed bipartisan political support. Agricultural payments have often been viewed as essential to maintaining a stable domestic food supply, protecting rural communities and helping producers survive volatile markets.

But Bruere worries that agriculture's traditionally protected position in federal spending debates may not last forever.

"Farmers have been the sacred cow on these issues," he said. "But at some point, we're going to have to fix our national debt."

The concern comes at an uncomfortable time for farmland owners. Inflation can help push commodity prices and farmland values higher, but it also increases the cost of borrowing money. Eventually, higher interest rates and the cost of capital can outweigh the benefits of rising agricultural revenues.

"I've always said inflation is great for farmland until it's not," Bruere said.