Net Farm Income Drops 53% Over Two-Year Period 2022-2024

Iowa’s agricultural economy is several years into a downturn, with net farm income falling 53% from 2022 to 2024 as record-high input costs, depressed grain markets and trade uncertainty put mounting pressure on farmers, rural businesses and communities, according to a new joint study released today by the Iowa Farm Bureau Federation (IFBF), Iowa State University (ISU) and the Iowa Bankers Association during Iowa Farm Bureau’s Economic Summit. The study, 2026 Iowa Agricultural Outlook: The Pressure is Rising, finds that negative margins are increasing farmer financial vulnerability across the state. 

Iowa’s crop farmers are facing a third consecutive year in which costs are generally outpacing prices. Corn and soybean production costs have increased 37% and 36%, respectively, since 2021, with the largest increases tied to machinery charges and seed, chemical and fertilizer expenses. Crop input costs are expected to remain uncomfortably high due to broader economic uncertainty and ongoing conflicts abroad, adding further pressure to already-tight margins. 

While today’s conditions do not yet mirror the severity of the 1980s farm crisis, both short- and long-term challenges loom large. “The clearest warning sign is a steady tightening across the farm economy with impacts felt well beyond the farm gate,” said Christopher Pudenz, Ph.D., Iowa Farm Bureau economics and research manager. “Agriculture remains one of Iowa’s largest economic drivers, accounting for roughly one-fifth of the state’s annual GDP, so a prolonged downturn can quietly weaken the workforce, erode the tax base and slow commerce across rural communities.”

John Crespi, Ph.D., director of the Center for Agricultural and Rural Development (CARD) at ISU agrees. “The usual impacts to net income seem to have their cycles, but if anything typifies the recent years, it’s uncertainty and its impact on profits. Inflation, tariffs, trade, labor, the Farm Bill, the Iran War, screwworm all add to uncertainty, all add to risk, making it harder to plan for the long term,” said Crespi. 

Signals from land values and lending environment

For Iowa row crop farmers, lower commodity prices and stubbornly high production costs are gradually tightening liquidity among mid- and large-size farms in 2026. Data shows the share of financially vulnerable farms has risen from 7.7% in December 2022 to 19% in December 2025 — though that share remains below the levels seen in the late 2010s.  Since farmers rely on yearly operating notes to run their operations, this financial pressure leaves less room for weather, market or policy surprises.

“Despite multiple years of challenging economic conditions, Iowa farmers have shown remarkable resilience,” said Adam Gregg, president and CEO of the Iowa Bankers Association. “Through it all, Iowa banks continue to be important financial partners to the farmers they serve, providing access to credit and flexible terms to navigate today’s ag economy.”

Resilient Iowa farmland values continue to support farmer balance sheets, collateral positions and borrowing capacity. According to the 2025 ISU Land Value Survey, 40% of respondents expect Iowa land values to decline over the next year, while 82% expect land values to increase over a five-year timeframe, reflecting both near-term pressure and longer-term confidence in Iowa farmland.

Livestock production provides rare opportunity for profitability

Several Iowa livestock sectors have provided rare opportunities for positive returns, helping offset deeper losses in parts of the farm economy. The cattle market, in particular, has been one of the lone bright spots in Iowa agriculture, with record estimated monthly cattle feedlot returns in 2025. Even so, strong demand and pricing, combined with low inventory, have driven up replacement costs for feeder steers and limited farmers’ ability to grow their herds.

“While some farmers have seen positive returns on cattle, strong demand amid low herd numbers and rapidly rising replacement costs have limited those opportunities,” said Pudenz. “This positive run has helped offset losses for some farm families, but we’ve talked to several Iowa cattlemen with empty feedlots because of high replacement costs and uncertain market conditions.”

Long-term trade projections

In 2024, Iowa ranked second among all states in total commodity export value at $13.7 billion, underscoring the importance of strong, reliable trade agreements for farmers and the markets they serve. Corn and soybeans remain Iowa’s dominant crops and are especially dependent on export markets. While U.S. corn exports are projected to be strong in the 2025 crop year, export strength alone has not been enough to offset high production costs, lower crop prices and continued uncertainty in key soybean markets, including China.

Iowa farmers are on the front lines of trade disputes because of their reliance on commodity exports. Agriculture-focused countries, especially those producing commodities directly targeted by retaliatory tariffs, are particularly vulnerable to trade disruption and market uncertainty.

As the U.S. works to secure agreements with trading partners, global competition continues to intensify, underscoring the importance of strong, reliable export markets. From 2025 to 2050, U.S. net exports of corn are forecast to fall slightly, while Brazilian net exports are expected to increase by nearly 20 million metric tons.

“Iowa agriculture depends on strong markets here at home and around the world,” said Iowa Farm Bureau President Brent Johnson. “Access to global customers supports farm income, local jobs and the broader rural economy. When agriculture is under pressure, the effects are felt across Iowa — from small businesses and rural communities to the state’s overall economic strength. That is why this study is so important: it helps quantify what farm families are experiencing and why Iowa’s agricultural economy matters to every Iowan.”