Economic bright spots for farmers and ranchers despite a cloudy crystal ball

Uncertainty in crop and livestock markets, high input prices and a cloudy trade and ag policy crystal ball. They’re all reasons why volatility remains a challenge for farmers and ranchers past the midway point of 2025 and beyond.

Amid these pressures, there are signs of stability that could help offset high production costs. By getting a feel for the current state of the ag sector, its future direction and the main drivers of change, you can identify ways to change, grow or evolve your farm or ranch so it’s on strong footing when the economic cycle turns more favorable for agriculture.

Optimism amidst consistent change and instability

Nationwide Chief Economist Kathy Bostjancic remains optimistic despite a volatile ag outlook with significant potential challenges both this year and in the future. According to Bostjancic, a few key macroeconomic indicators suggest a scenario of moderation rather than crisis:

• Gross Domestic Product and the Consumer Price Index (CPI) both are trending lower. “This signals that inflation is gradually cooling, including for things like fuel, fertilizer and some farm chemicals,” Bostjancic said.
• While ticking up slightly, unemployment remains relatively low.
• Core services and goods prices are starting to deflate.
• Spending is robust. “Still, some households are dipping into savings and upper-income brackets are experiencing the most significant wealth gains,” Bostjancic added.

Lingering financial pressure on the farm

Farmers and ranchers likely will continue to face challenges through 2025, the Nationwide economist said. Even with some economic improvements, the cost of farm inputs remains high. Expenses like crop protection products, fertilizer and fuel are expected to keep putting pressure on profit margins.

“This lag is creating a scenario where farmers are absorbing more risk for less potential return,” Bostjancic said.

Interest rates and financial pressure

Recent interest rate hikes, coupled with the slow pace of rate reductions due to broader economic sluggishness, continue to weigh heavily on farmers and ranchers. Rising borrowing costs have left some feeling financially stretched, particularly farmers or ranchers with considerable operating loans or land debt. As a result, capital spending on items like new farm machinery and equipment is likely to remain subdued for the foreseeable future.

“Consumer insurance outlooks have improved. But the overall weight of financial obligations brings a level of stress that simply can’t be ignored,” Bostjancic added.

Practical strategies for navigating farm input cost pressure

Building resilience amidst this kind of uncertainty takes more than optimism. Here are a few steps to help manage through today’s volatile markets:

1. Rethink input buying strategies

• Lock in prices early whenever possible. This is especially important for essentials like fertilizer and fuel. Doing so can help prevent buying when prices spike during peak demand.
• Leverage group buying programs or ag cooperative memberships for bulk discounts and negotiation power.

2. Consider new technology and tools

• Think about adding new farm management software that helps manage inputs and expenses. New artificial intelligence tools, for example, can help track everything from crop modeling to automated input tracking.
• Use data-driven insights to fine-tune different operations. This includes fertility programs, irrigation schedules and livestock herd health plans. Doing so can help maximize value from each dollar spent.

3. Build financial resilience

• Review and update operating lines of credit and be proactive about talking to lenders as interest rates shift.
• Work closely with insurance providers to ensure your risk management strategies are fully updated and reflect your current operational realities.

Offer your unique expertise

At Nationwide, we understand the importance of staying informed about the evolving challenges and opportunities within the agricultural industry. Talk to your Nationwide Farm Certified agent to get ideas how to work through a challenging ag marketplace.