Fed Economists: Agriculture Showing Resilience Despite Ongoing Challenges

The struggles facing U.S. farmers and the agriculture industry as a whole have been well documented over the past few years.

The headlines paint a picture of a sector under pressure: low commodity prices, high input costs, trade disputes, and global conflicts that continue to weigh on the bottom line of both farmers and the businesses that support them.

But a recent article from the Federal Reserve Bank of Kansas City, packed with data spanning the past 25 years, offers some valuable perspective. The authors argue that agriculture is demonstrating resilience rather than facing a full-blown crisis. 

They also point to strong farmland values as a key source of stability in an otherwise uncertain economic environment.

Here are some of the key takeaways.

Commodity Prices

Authors Nate Kauffman and Ty Kreitman, economists with the Federal Reserve Bank of Kansas City, said low crop prices and high production costs have been major factors behind the recent weakness in U.S. agriculture. The current tariff environment and reduced soybean purchases by China have also been cited as reasons for tighter profit margins.

However, the authors argue there is more to the story.

“Despite reduced exports, the price of soybeans has remained higher than at the beginning of 2025. Soybeans are a globally traded commodity, and markets adjust to shifting trade flows,” they wrote. “For example, when China sources more soybeans from Brazil, prices respond across regions, and the commodity is redirected to alternative export markets and domestic end uses.”

Kauffman and Kreitman note that since 2023, domestic consumption of U.S. soybeans has increased by more than 15% as demand for renewable diesel and soybean oil has grown.

RELATED: What U.S. researchers are doing to find new ways to use soybeans.

Input Expenses

The conflict in the Middle East has led to higher fuel and fertilizer prices, but the authors say the impact on U.S. crop producers has been limited so far. Many operators purchased fertilizer before the conflict began, helping insulate them from immediate price increases.

“While a prolonged conflict could affect fertilizer availability and application rates, U.S. producers are significantly less exposed in the near term than other leading global producers, such as Brazil,” Kauffman and Kreitman wrote.

Profit Margins

The authors also point out that while profit margins remain challenging for many farmers, the current situation looks less severe when viewed in historical context.

“The near-term effects on profit margins have been relatively small,” they wrote. “The projected per-bushel profit margin for an average U.S. corn producer in 2026 was about -$0.07. Accounting for the increase in fertilizer and fuel prices as of late April puts the average projected profit margin at about -$0.12, recognizing that crop prices have also increased since February.”

Although profit margins for U.S. crop producersfarm are expected to improve compared with a year ago, they remain well below both the near-record levels reached in 2022 and the five-year average.

“Despite recent challenges, however, the aggregate financial health of the U.S. agricultural sector has remained relatively stable,” the authors wrote. “The debt-to-asset ratio of the U.S. farm sector is expected to increase slightly in 2026 to 13.8%, but it remains near historical norms and well below levels seen during the farm crisis of the 1980s.”

The report also noted that leverage across individual farm operations remains near historical norms, while liquidity remains strong for many producers.

Farmland Values

Farmland values have also played a significant role in supporting the agricultural economy.

“Resilient farm real estate values have been a primary factor limiting the increase in debt-to-asset ratios,” the authors wrote. “From 2010 to 2025, the average value of farmland increased about 150% and has generally remained near record levels.”

RELATED: Why the Chicago Federal Reserve says farmland values continue to show signs of strength in 2026. 

Finally, the authors noted that while delinquency rates on farm loans have risen in recent years alongside lower farm incomes, those rates remain near historical lows. In addition, bankruptcy filings among farm operations remain below levels seen during the last widely recognized period of financial stress from 2015 to 2019.