Fields are about to be planted. Livestock are cared for. Food shows up on shelves at the grocery store. Fuel is available for our cars. And the everyday items we depend on like medicine, clothes and household items that contain ag products aren’t in short supply.

So, everything must be OK out in farm country, right?

But behind the scenes, many family farms are facing some of the tightest margins they’ve seen in years, driven by high input costs and ongoing pressure in the farm economy.

That makes it even more important to understand how farms operate financially year to year.

Most farmers take out a loan—called an operating note—that has to be paid off within 12 months. These notes cover expenses like seed, fertilizers, equipment maintenance and “cash rent”—a payment, typically to a retired person, to farm their land.  

After paying back that loan, any remaining money is often reinvested into the farm for improvements and future expenses.

In 2026, however, tighter margins may leave some farms with little left to reinvest.

What does it cost to grow corn and soybeans?

Every farm will have its own unique break-even calculations. This equation indicates how much money a farmer needs to make just to cover their expenses throughout the year.

Iowa State University (ISU) estimates the cost to produce a bushel of corn in 2026 (for a field planted to soybeans last year) at $4.33. For soybeans, the estimated cost of production is $10.96 per bushel.

Meanwhile, cash prices across Iowa for farmers to sell their corn and soybeans are averaging $4.11 and $11.13, respectively.

This comes at a time when net farm income for corn and soybean farmers is at the lowest level in 15 years.

What is the biggest problem for farmers?

Many of us have experienced higher prices on everyday items, and those costs have been slow to come down.

Typically, farm expenses and farm crop prices follow similar trends—rising and falling together. However, input costs continue to rise without crop prices moving to meet them.

According to ISU, input costs for growing corn after soybeans are up 16% compared to 2022. But since 2022, cash corn prices have dropped by 38%.

It’s a similar story for soybeans grown after corn; input costs are up more than 18% since 2022, while the price farmers received this January for their soybeans was about 22% lower than it was in 2022.

Individual inputs saw even bigger jumps, with costs for crop protection products, machinery and interest costs all increasing by at least 40% over those four years.

How does the farm economy affect Iowa’s overall economy?

Agriculture employs one in five Iowans and accounts for one-third of Iowa’s economic output.

When family farms are financially unstable, less money flows into local communities and ag-related businesses. This begins to create a trickle-down impact on suppliers, food companies and small mom and pop stores.

In 2024, lower farm profitability was estimated to have resulted in the loss of 11,400 jobs and $1.5 billion in value-added economic activity.

Why are farmers getting government payments?

Most farmers would prefer strong markets and reliable trade opportunities over government assistance. When markets are weak, federal programs can help farms manage periods of financial pressure.

It’s important to remember, while farms often hold high-value assets such as land, buildings and equipment, these assets don’t translate to cash unless they are sold. That’s why you may sometimes hear farmers described as “asset rich, cash poor.”

When government payments are issued, they rarely sit in a farmer’s bank account for long. In many cases, that money goes directly toward paying down loans and ag retailers.

These dollars keep farmers afloat and support the businesses and services farmers rely on.  

In the farm bill, 80% of government funding goes toward nutrition and food assistance programs. The remainder goes toward conservation programs, agricultural research and crop insurance.

These federal risk management tools help protect farmers from factors out of their control, such as weather and trade disruptions. And many would agree protecting our domestic supply of agricultural goods is a matter of national security. The passage of an updated farm bill (which is more than two years overdue) is critical in adjusting to current ag market prices, especially amid farm bankruptcies.

How do farmers manage the ups and downs of the farm economy?

In Iowa, many farmers diversify their income by taking off-farm jobs or adding niche production such as direct-to-consumer markets, flowers, farm stands, conservation services and more.

When crop prices are strong, farmers may also sell ahead in attempt to capture a profit.

And some markets—like cattle—are cyclical in nature, meaning there are up years and down years as supply and demand ebbs and flows in the global marketplace.

Because of that, many farms plan across multiple seasons, using stronger years to help balance the tighter ones.

The financial strain farmers face today isn’t just an agricultural issue—it’s an Iowa issue. When farm incomes tighten, the effects ripple through local businesses, jobs and entire communities.

Understanding these pressures helps explain why strong markets, sound policy and reliable risk-management tools matter for farmers. And why they matter for the products we depend on and the rural communities we call home.