What can Wisconsin grain farmers do about projected low profit margins?

The USDA’s 2025 projections for corn and soybean prices are below the estimated break-even prices for Wisconsin farmers.  The USDA projects a season-average farm price of $3.90 per bushel for corn and $10.00 per bushel for soybeans.  However, the estimated break-even prices for Wisconsin are $4.65 per bushel for corn and $10.80 per bushel for soybeans.  If these projections hold true, Wisconsin grain farmers are likely to face negative margins in 2025.

What can Wisconsin farmers do? 

Review and renegotiate a farmland lease or rental contract details

Full-time grain farm operators with a high proportion of cash-rent acres, who carry high debt levels are most likely to be impacted by narrow profit margins in 2025.  These farmers may want to discuss their current farmland lease agreement with a landlord and renegotiate the terms of their rental contracts for 2025.  Explore the links on this page Ag Land Lease and Rental Agreements – Farm Management to learn more about farmland sale values, ag land lease rates and contracts, custom rates and equipment rentals, and other issues impacting Wisconsin farmland rental agreements.

Strategically manage borrowing costs

Given this challenging economic outlook, farmers are advised to be cautious about making significant investments.  To help ease current economic challenges farmers can explore Ways to Reduce Borrowing for Your Farm and using Marketing Assistance Loans to Manage Interest Costs. Marketing Assistance Loans are short-term loans (for up to 9 months) through the USDA Farm Service Agency that use harvested grain as collateral. The article How to prioritize debt repayments provides suggestions to manage debt effectively with a tool to prioritize your obligations effectively. The article, Measuring Price Risk for Your Farm Business describes how to measure price risk with an example of the average monthly corn prices in the United States.

Consider alternatives to high-cost investments

Purchasing used equipment may be a practical alternative to new machinery in this economic environment. It is important to compare the cost of ownership with alternatives. Since used equipment has a lower initial cost, current economics may make this option more economical.  Farmers interested in cost-effective machinery options can review Key factors when purchasing used farm equipment and machinery. A well-maintained used machine can retain much of its value. While used machinery can be a cost-effective choice, there are situations where new equipment may be a better long-term investment:such as warranty coverage, advanced technology and safety features and long-term reliability. Farmers should carefully weigh the pros and cons of each option, considering the projected economic conditions and long-term operational goals.

Farmers can learn about ideas in the factsheet for Balancing Sustainably and Innovation in Wisconsin Agriculture and videos at the associated YouTube Channel for resources on how to balance innovative economic investment ideas with established sustainable practices in nutrient management, cropping systems, and pest management.

Prioritize your health and use the resources available to you

It can be difficult to effectively communicate with others in times of stress. Extension helps farmers, families, businesses, and communities remain resilient by learning how to manage stress and use planning tools to make sound decisions.  Check out resources for farmers and farm families on stress management and communication at Resilient Farms & Families and remain resilient by learning how to manage stress and use planning tools to make sound decisions and create a road-map for the future. When stress is high and you need someone to turn to, the  ​​​​​​​​​​​​​​​​​​​​​​​​​​​Farmer Wellness Program can assist. The Wisconsin Department of Agriculture Farmer Wellness Program is designed to provide farmers and their families access to services that can help them navigate life’s challenges.