USDA is forecasting net farm income to jump nearly 30% this year, but talk to row crop farmers today, and they’ll tell you that’s not the case. From farmers and ag lenders to ag economists keeping a close eye on the fragile state of the farm economy, many fear this year could be worse than last as the possible impact of tariffs is throwing even more uncertainty into the mix.
Currently, U.S. farmers are focused on what they can control: putting a crop in the ground. The wheels are already in motion this spring for northwest Iowa farmer Ben Riencshe.
“We’re putting on fertilizer, we’re doing a little light tillage, ammonia, phosphorus and potash and getting fields ready. It will be a few weeks before we put seed in the ground,” says Riensche, owner and operator of Blue Diamond Farming Company, which is located in Jesup, Iowa.
Farmers’ Biggest Concern? Cash Flow
Dry conditions this winter are helping Riensche get in the field a little early. It’s a hopeful start to what could be another challenging year.
“Locally, it’s been dry, so we need to catch up with rain. But a dry spring is usually a blessing, just as long as we catch up later,” Riensche says. “I think more on the mind of farmers is finance. We’ve had a couple years of drawdown on farmers’ working capital. Prices are probably slightly below most farmers’ cash flow level of production. $4.50 corn, which we think is a gift compared to harvest time last year, still doesn’t quite reward unless you’ve got a tremendous amount of equity in your land or machinery.”
Two-Thirds of Ag Lenders Are More Worried about 2025 Compared to 2024
Creighton University releases a survey of ag bankers each month called the Rural Mainstreet Index (RMI). The latest RMI shows two-thirds of ag bankers think 2025 will be worse than 2024, and Riensche agrees.
“If we stay on the current course, I think that’s exactly true,” he told U.S. Farm Report. “I think grain farmers will have another year of drawing down working capital.”
Input costs are still a pain point for farmers like Riensche, with some inputs elevated from even last year.
“They haven’t come down much. Fertilizer’s even made a little attempt to go up. I wish there was a little more competition in that space,” he says. “And machinery, oh my gosh, the inflation in machinery. A lot of analysts say we’re up one-third over the past five years, but it really feels like 50% by the time you look at repairs. The repairs on these newer diesel engines with the emission systems are just so costly it’s half of our engine repair costs now.”
Tim Homan is a relationship manager for Rabobank who works with larger operations across central and eastern Iowa. He says he’s not in the camp of ag bankers who think this year could be worse than last.
“I would say we’re set up similar to last year. Of course, there’s a lot to determine where we end up by this fall. The crop is not even in the ground yet,” Homan says. “Farmers have done a great job of holding together overall the last couple years. They have chewed through some working capital that was built up in ‘21 and ‘22. But through it all, when we run our analysis on our renewals of our operating lines. We’re finding that, for the most part, people have been able to keep it together and losses have been overall on the lower end compared to what we were thinking when we first put them in place.”
However, there are some warning signs of stress, and Homan says if farmers don’t have opportunities to market grain at profitable levels this year, it could spell trouble for 2026.
“Are you more concerned about this year or implications for next year,” U.S. Farm report asked Homan.
“Well, I think we always have to be worried about this year, just because there are a lot of unknowns yet. Most [farmers] have held together, but working capital has taken a hit. You’re a lot more confident in your balance sheet when you have good working capital with whatever comes along. It gets a little more nerve racking once that safety net on your balance sheet falls off,” Homan says.
Eroding balance sheets are a concern being echoed by ag lenders- and economists- across the U.S.
According to Farm Journal’s latest Ag Economists’ Monthly Monitor, 62% of ag economists think the row crop side of agriculture is already in a recession, and 85% of those surveyed think it will accelerate consolidation not only on farms, but also agribusinesses.
“The end of the year was rough, but looking at projected cash flows for ‘24/25, we see that looking even worse. Unrealized, of course, but definitely looks like it could be a challenge,” says Alex McCabe, agribusiness loan officer with CUSB Bank, which is located in northeast Iowa.
The Biggest Wild Card: Tariffs and Trade
With a third year of low corn and soybean prices penciled in for current projections, the one thing that saved some of the farmers in this area last year was the ability to out-yield the price.
“If things hold together this year yet, farmers take advantage of opportunities and yields are decent, things could still be okay this year. Next year’s a total unknown. You have the extra question this year of tariffs and their impact,” Homan says.
“Last month we were in Canada, and for every single farmer I talked to, their biggest concern right now is trade. But would you say that’s not your biggest concern,” U.S. Farm Report’s Tyne Morgan asked Reinsche.
“I think we’re in a good negotiation phase. For those of us who’ve dickered on a new tractor or wrestled with an input supplier to get the fertilizer at the right price, we’re just making offers right now,” Reinsche says. “So much of this, especially with our Canadian neighbors, is about making trade equal - countervailing so that our products equal theirs.”
“So, you’re in the camp that short-term pain is long-term gain,” Morgan asked as a follow-up.
“Absolutely,” Riensche says.
Not all farmers agree, though. Farm Journal conducted a recent poll of farmers and ranchers, asking the question, “Do you support president Donald Trump’s use of tariffs as a negotiation strategy?” 54% responded “no” and 41% said “yes”.
The poll then followed-up by asking, “Do you believe USDA will compensate farmers for losses if agriculture is affected by a trade war?” Those responses were more mixed, with 36% saying “no” and 34% responding “yes”.
When ag economists were asked if they think President Trump’s strategy of using tariffs as a negotiating tool will benefit U.S. agriculture in the long run, 92% said “no.”
“If you dig into some of the comments that were made, it’s hard to answer sometimes a “yes-no” question like that,” says Krista Swanson, chief economist for National Corn Growers Association (NCGA), and one of the economists who responded to the survey. “ I noticed one that said, ‘You might win, but the risks are really huge.’ So there’s that possibility. Another comment was, ’It depends how the tariffs end up. What’s their end result? Do they end up reducing trade barriers or do they end adding to the trade barriers?’”
Swanson says as she thinks about long-term impacts, it ultimately hinges on if this trade war is short-lived and if the U.S. could see benefits long-term. But relational damage with trade partners, however, she says can be difficult to restore.
Preparing for Liberation Day on April 2
In what President Trump has touted for weeks as “Liberation Day,” the White House confirmed on Tuesday plans to follow-through with reciprocal tariffs on Wednesday, April 2.
The White House says it will impose new tariffs on Wednesday, though there have been no details regarding the exact size and scope. Trump has said he will target all countries, but he’s hinted at the fact some countries could take a larger hit.
.@PressSec details the unfair trade practices that are hurting American business:
— Rapid Response 47 (@RapidResponse47) March 31, 2025
- 50% tariff from the EU on American dairy
- 700% tariff from Japan on rice
- 100% tariff from India on agricultural products
"This makes it virtually impossible for American products to be… pic.twitter.com/PI9inicgdX
In front of the White House on Monday, White House press secretary Karoline Leavitt talked specifically about what she called “unfair trade practices” hurting U.S. farmers. That includes:
- 50% tariff from the E.U. on American dairy
- 700% tariff from Japan on rice
- 100% tariff from India on agricultural products
“This makes it virtually impossible for American products to be imported into these markets. It’s time for reciprocity,” Leavitt says.
Farmers Argue the Growing Ag Trade Deficit Needs to Be Addressed
Farmers like Riensche are hoping getting tough on trade will address the record ag trade deficit.
“We’re going to go through an adjustment period. We’re going make things a little less than comfortable for a while here while we make our trade partners be fair trading partners. It could be hard in the short term on farmers,” Riensche says.
Riensche not only met with agriculture secretary Brooke Rollins during Top Producer Summit this year, but he also got invited to USDA for a meeting with her staff.
“What I saw out of the USDA staff in the White House is they’re very cognizant of that. They need to have methods and ways to keep us whole for a very short period of time as we go through the adjustment period. The linkage won’t be perfect — it never will. There will be mistakes made, but I have great confidence if they keep farmers whole through the adjustments period, we’re going to have a wonderful food production system,” Riensche says.
Rollins Vows Aid to Farmers If They’re Caught in a Trade War
Rollins hasn’t been shy about acknowledging the potential disruptions of trade, but also vowing to help make agriculture whole with some type of assistance. As AgWeb first reported last month, Rollins spoke at Commodity Classic this year, saying improving the ag economy is USDA’s top priority.
Then during a tour of Iowa agricultural facilities this week, Rollins said USDA is prepared to support farmers while tariffs go into place.
“Hopefully our farmers and our ag community won’t be hurt — at least in the short term — by these decisions,” Rollins says. “But if they are, the president’s commitment is the same today as it was five or six years ago. And we at USDA and our partners across Congress and in Washington will work around the clock to ensure that we have the programs in place to do what we did the last time with the (Commodity Credit Corporation). We fully expect to do the same this time but it’s to be determined based on what happens in the next weeks and month.”
In an exclusive interview with Farm Journal in late February, Rollins described how USDA plans to get the ag economy back on track from a recession.
“There’s no doubt — a lot of our producers in the different lanes are really hurting. Listen, we’ve got to get the cost of inputs down. We have got to get our export markets opened up around the world. I mean, we’re facing this year a $45 billion trade deficit,” Rollins says.
She recalls how when President Trump left the White House in 2020, there wasn’t a trade deficit. It’s something she says he wants to address.
“Just think about the amount of ag production that we were once moving out across the world that was keeping our farmers whole and making sure they could make some kind of a profit,” Rollins says. “That’s not there anymore. Obviously, inflation and the cost of energy have absolutely decimated our producers. The input cost is up 30%. When you’ve got all of these different factors that are basically piling on at one time, it’s no surprise that sorghum, cotton and so many others are really hurting right now. We’ve got to do something about that.”
As input prices remain elevated, and commodity prices are below break-even for some, Rollins says she and President Trump are aligned in what needs to happen to bring relief to farmers.
“My perspective, and the President’s perspective, is how do we achieve this through broader access to markets, broader access to capital and making sure that the cost of inputs goes down? Hopefully, with our energy plan, we see that happening almost immediately. I think that will move into a different era for prosperity for ag, but there’s no doubt it is a dire, dire forecast right now without significant change,” she says.
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