2025 Farm Crisis?
Like the 1980s the term farm crisis has re-emerged in 2025. The primary concern is the drop in commodity prices, with wheat, sorghum, and corn plunging nearly 37% (WASDE) from 2022 thru 2025. Furthermore, our nation is struggling with inflation and seed, chemicals, and fertilizer are not exempt.
In the last couple of years, The USDA reports that the cost to produce a single acre of grain sorghum is $449 per acre, (USDA-ERS). The Rooks County, Kansas average yield for grain sorghum is around 80 bushels an acre. Local elevator prices are $3.75, generating gross revenues of $300 per acre. Using some quick math, sorghum generates a net loss of -$149 per acre. Unfortunately, corn, wheat, and soybeans are also trending negative.
To compound problems within western Kansas, most dryland farmers did not reach 80 bushels per acre this year. Unlike the corn belt, the western half of Kansas was hot and dry this summer. In our example above, if you change the yield to 65 bushels an acre the net loss jumps to -$205 per acre.
One would think that federally supported insurance (multi-peril) would help mitigate financial loss. However, in most cases adverse weather conditions do not drive yields down to levels where coverage is invoked in a meaningful way. In other words, most farmers would end up paying their premium with little or no production or revenue compensation at 65 bushels per acre. To be honest, most farmers use multi-peril insurance to protect against catastrophic loss.
For the second straight year, corn, sorghum, and wheat are all upside down financially. Typically, most farmers can withstand 1 or 2 years of down trends. However, when it extends into 3-4 years, we see farm and equipment sales, foreclosures, etc.
2025 looks to be a difficult year. As we approach the new year, terms like cashflow, reduced revenue, and elevated expenses are all going to be discussed and cussed.