Farmers in Wisconsin Face Economic Stress Similar to 1980s Crisis

Pat Mullooly's farm in southern Wisconsin is facing economic stress due to low crop prices and high input costs. The sixth-generation farmer has had strong yields for both corn and soybeans, but this year's crop doesn't appear as good as last year.

Mullooly worries he won't have enough money to cover his expenses. Profit margins for U.S. corn and soybeans have been negative for the past two years, according to data from the U.S. Department of Agriculture. This year's cost of production is projected to be even higher due to the war in Iran driving up the price of fertilizer and fuel.

The prolonged period of negative margins has drawn comparisons to the 1980s farm crisis, which led to an estimated 300,000 farms going bankrupt or foreclosed. However, Seth Meyer, agriculture economist and head of the University of Missouri's Food and Agricultural Policy Institute, notes that crop insurance is now commonplace for farmers, and they have access to federal safety net programs.

Meyer said these supports are designed to keep producers from suddenly losing their farm through foreclosure, but they won't keep people from exiting. He also mentioned that the government has provided emergency payments to help farmers pay down debt and survive until crop prices recover. However, he noted that this support can have the unintended effect of keeping costs for supplies high.

Joe Springer, managing director of agriculture lending for Compeer Financial, said interest rates are still well below what they were in the 1980s, but farms are carrying a lot less debt thanks to the last period of high crop prices from 2020 to 2022. He worries that the increased volatility in both crop prices and the cost of inputs could be here to stay.