Why This Current Ag Cycle Feels Different
9/17/2025 1:00:00 PM

Profitability in production agriculture often has more steep slopes and tight turns than a roller coaster at Six Flags. Today, ag profitability is largely sector specific. We’re possibly in the most bifurcated ag economy I’ve ever seen.
If you’re a livestock producer, chances are your economic outlook is rather positive and favorable. Record high beef prices, along with respectable dairy and hog prices, are fueled by lower feed prices and strong consumer demand. For this crowd, life is probably pretty good right now. It seems like the things we eat (such as beef and pork) are doing quite well, while the commodities that we feed livestock (such as corn and soybeans) are struggling.
If you’re a grain producer, or have a business primarily associated with grain producers, you know the harsh economic reality and outlook. To be perfectly blunt, we’re in some pretty rough seas. For many in the ag world, storm clouds are brewing in the west with no place for safe refuge or shelter. Although it’s a lagging indicator and still a small number overall, Chapter 12 farm bankruptcies are on the rise. It’s not a huge concern at this time, but it’s something we’ll be keeping an eye on.
With the near-term outlook rather pessimistic, producers and lenders alike must make managing downside risk our primary focus.
What’s Different About This Cycle
Agriculture has been and always will be an uncertain and cyclical business. But over the past few decades, I’ve found the cycles have become a bit more compressed, with the peaks getting higher and the valleys getting lower. It seems that for grain producers, we’re potentially going into a pretty deep gorge with this cycle.
I’m well into my fourth decade on the financing side of agriculture, and this downturn may have me more worried than past slumps. Here’s why:
- Interest rates have doubled
- Commodity prices have eroded, reaching the lowest July levels since 2006
- Much of the working capital or liquidity that had been built up in previous profitable years has been exhausted
- There’s a lack of certainty with a farm bill combined with uncertainty in critical government policy affecting agriculture, such as trade and tariffs
- The potential pluses and minuses of MAHA (Make America Healthy Again) are also causing anxiety for some producers
Coupled with likely the most expensive crop ever raised (primarily due to sticky input prices), it’s hard to find upside in the near term.
In the absence of unexpected revenue – like government payments, for example – most grain producers may not be profitable in 2025. Even the best operations may be challenged to break even. Look for another round of refinances to build back working capital and cover operating losses.
Current Crop Outlook
On the plus side, the current outlook for most crop-producing areas is for a big harvest, barring an early frost or other curveball from Mother Nature. So far at least, Mother Nature has been smiling on many Midwest grain operations, and the extra bushels or hundredweight will be very welcome. But with depressed commodity prices – such as corn with a $3 in front or beans with a $9 in front – it remains to be seen if producers can raise enough bushels to offset those decreased prices.
The USDA is estimating a massive, record corn crop – 16.7 billion bushels. Having the extra bushels helps, but the reality is we need to find a home (here or abroad) for all these crops. Given the uncertainty in our trade and tariff policies, finding a market for those bushels could prove to be problematic. It’s not surprising, then – given the reduced prices and volume, exports for our bulk, raw commodities, and high imports of fruits and vegetables – that the U.S. agricultural trade deficit is setting all-time records.
Soybean bushels are predicted to be down slightly compared to 2024 due to fewer acres planted. However, given that about two-thirds of all U.S. soybeans raised are exported, the current trade and tariff policies – coupled with competition from the Global South (namely Brazil and Argentina) – make for some stiff headwinds to price recovery. Pre-2018, North Dakota exported over 70% of its soybeans to China. No more. The U.S. is the last place China wants to buy their commodities from right now. (In fact, as of September 1, China had not bought a single cargo of soybeans for the coming year.)
It's interesting to note that China recently announced a major investment in the African nation of Angola to develop 100,000 hectares (about 250,000 acres) of farmland. Most of these acres will go toward corn and soybean production, with about 60% expected to be exported back to China. Could Africa become the next “Global South” powerhouse?
Looking Ahead
Is it all doom and gloom in the grain sector? No, of course not. Your current situation doesn’t have to be your last. U.S. producers are the most efficient and adaptable producers in the world. Future events – although of course unknown at this time – will bring brighter days back to this sector. But it could take peak management skills and the ability to look at new ways of doing things. Old keys don’t always open new doors.
People – and livestock – around the world still need to eat. Focusing on things one can control and managing around the uncontrollable will be key. If possible, avoid making knee-jerk decisions on important issues. Having a clear head can help take emotion out of your critical decision-making areas. Often, patience can be the pathway to success.
Do scenario planning, stress-test budgets, monitor cash flows, maintain discipline, and make sure you’ve fully vetted and scrutinized new opportunities. Look for operational efficiencies and ways to find new and different revenue streams. Be disciplined in good times and committed during bad times. It may also be worth considering forming strategic partnerships when they make economic and operational sense for you.
Surround yourself with a solid mentor or a team of advisors who can give impartial and honest feedback. Also, have goals for your operation – and put them down on paper. A recent study by the Purdue Center for Commercial Agriculture found that the top goal for farm operations is farm transfer, with profits number two and reducing debt number three.
It’s not hard to see why that’s the case. The U.S. only has about 25% of the farms we had a century ago, and many of those farms and farmers are aging quickly. There are more farmers over 75 years old today than under 35. Consolidation in virtually every agricultural area – from individual farms to seed/chemical companies to equipment manufacturers and dealers – doesn’t seem to be slowing down. In fact, in some sectors, it may be accelerating due to all the uncertainty.
Given all of this, be sure to take care of your physical and mental health. You need to be at your best not only to make important management decisions, but also to take care of your family. Don’t measure your self-worth by your net worth.
Will taking all these steps guarantee success? Of course not. But they will help put the odds in your favor.
And a major hiccup or disruption in South American corn and soybean production wouldn’t hurt, either!

Lynn Paulson
SVP/Director of Agribusiness Development