On Thursday, the National Corn Growers Association (NCGA) sounded the alarm regarding the worsening economic situation in rural America. They highlighted that the economic crisis is exacerbated by plummeting commodity prices, which have dropped significantly at a time when input costs remain at nearly record highs. Specifically, corn prices have seen a staggering decline of over 50% from their peak in 2022, while production costs have only decreased by 3% during the same period. This discrepancy translates to a loss of approximately 85 cents per bushel, according to the NCGA's reports.
The NCGA expressed concerns that the outlook for the upcoming year appears even bleaker, with expectations of lower prices coupled with rising costs. In response to this dire situation, the association has urged Congress and the Trump administration to take action to boost demand. Proposed measures include increasing the blends of ethanol and enhancing access to foreign markets for U.S. corn products.
As the harvest season approaches, the soybean association noted with concern that China has not made any purchases of U.S. soybeans for the upcoming months. The prolonged negotiations with China without a trade deal could lead to deeper financial strains for farmers as fall progresses. Like their corn-growing counterparts, soybean farmers are facing sharply lower prices while simultaneously dealing with high production costs. The association underscored that “soybean farmers are under extreme financial stress,” as they continue to see prices decline while input and equipment costs rise.
The grim outlook for the agricultural economy is further corroborated by the latest survey from the Federal Reserve regarding farm financial conditions. The survey revealed that declining income levels have diminished liquidity for farmers, leading to an increased demand for financing. Credit conditions have also worsened, with approximately 30% of respondents from the Chicago and Kansas City Federal Reserve districts reporting lower repayment rates compared to the previous year. In the Minneapolis Fed region, this figure rose to around 40%, and the St. Louis Fed reported a concerning 50% of respondents facing similar issues.
Despite these challenges, U.S. farmers are poised to receive substantial assistance. Following the initiation of a new trade war earlier this year, the Trump administration and lawmakers began discussions about a bailout for farmers in April, similar to previous support during Trump's first term. The One Big Beautiful Bill Act, signed in July, allocated roughly $66 billion towards agriculture-focused spending, with about $59 billion designated for enhancements to farm safety nets, as reported by the American Farm Bureau Federation.
In addition to domestic support, other trade agreements negotiated by Trump may lead to increased purchases of U.S. crops from countries in Asia. For instance, Indonesia and Bangladesh have committed to boost their imports under existing agreements. According to recent reports, Vietnam, the Philippines, and Thailand are also likely to increase their feed grain purchases. Timothy Loh, the regional director for Southeast Asia & Oceania at the U.S. Soybean Export Council, noted that there have been productive trade discussions that present opportunities for the U.S. to enhance its access to markets in the region. He stated, "We are anticipating higher demand for U.S. products such as soymeal and other U.S. agricultural exports into Southeast Asia."
