The farm financial outlook isn’t pretty, but are farmers knocking on the same door as they were in the 1980’s?
Unfortunately, breakeven prices for both corn and soybeans have risen about 20% since COVID.
“The corn breakeven, right now, even on high productivity ground, is $4.90,” explains Purdue ag economist Michael Langemeier, director of the Purdue Center for Commercial Agriculture. “So, it’s way above where the prices are, but so are the soybeans. You look at the soybean breakeven, it’s about $11.50, $11.60, on high productivity ground. It can be over $12 on average to below average productivity ground.”
Langemeier tells us on the latest Purdue Crop Chat podcast that 2025 will be the worst year we’ve seen since the ethanol boom began in 2007, and he’s getting many questions about farm financial stress.
“When you look at financial stress, there are two things you look at. Relatively low net returns; we’ve got that this year. I mean, net returns are going to be pretty low for corn and soybean producers. But you also look at the balance sheet, and the balance sheet right now is pretty strong. We had a lot of liquidity coming out of the very good crops in ’21, ’22, and not too bad of a crop in ’23. So, the liquidity is drawing down a little bit, but it’s not in a danger zone right now. But on the long side of the balance sheet, land values continue to hold steady.”
So, will history repeat itself and will we see tough times like the 80’s? Langemeier says we’re not even close to that because of the balance sheet strength.
“We are heading back probably to the 2014-2019 period. That’s the period, I think, where we could be in that kind of situation, where the returns are relatively low, but the balance sheet holds pretty strong.”
Hear more from Langemeier as he joins us on the Purdue Crop Chat podcast from Hoosier Ag Today. Watch it below or on our YouTube and Facebook channels.
