On one hand, 2026 could be a tougher slog than 2025.
January’s USDA bombshell report that pegged 2025’s corn crop above 17 billion bushels set prices back. On-again and off-again tariff threats create a zig-zagging soybean export and price picture. Inputs remain stubbornly sticky.
Then again, some sunshine is peeking through.
“2025 actually turned out better than a lot of us expected last summer,” Jim Knuth, senior vice president of Farm Credit Services of America, said at last month’s Land Expo in Des Moines, Iowa. “At the end of December, our loan portfolio was actually better than in 2024.”
It’s due to a five-part equation, Knuth said. Two components that are always present are price and bushels. In 2025, however, three wild cards helped soothe many farmers’ finances:
1. Government aid. The federal government provided payments to farmers.
2. Reducing disease. Corn fungicide applications that deterred disease spawned double-digit yield gains that far surpassed product and application costs.
3. Increased coverage. Crop insurance supplemental products such as the Enhanced Coverage Option extended price and yield protection — and, thus, farmer payments — beyond an 85% coverage level.
Still, farming in 2026 won’t be easy. Even though torrid U.S. corn exports have helped to keep global stocks snug, exports don’t consume as much corn as livestock and ethanol, Knuth said.
Chinese-U.S. trade relations also remain a sticking point. Despite late October’s agreement to export 12 million metric tons of U.S. soybeans to China, just 8 million metric tons had been exported by the end of December. Meanwhile, Brazilian soybean exports to China tallied between 80 million and 100 million metric tons for 2025.
“We don’t like to think about it, but we’re plan B [for soybean exports] to China,” Knuth said.
2026 strategy
So, what’s the secret sauce to surviving (and maybe thriving) in 2026? Try these strategies:
1. Have adequate working capital. “We always start with working capital — current assets minus current liabilities,” Knuth said. “Strive to have working capital at least 20% of the value of your farm production. If you assume around $1,000 per acre [in gross revenues], have $200 [per acre] in working capital.”
2. Maintain sustainable debt levels. Amounts vary, depending on the component.
“Our data says sustainable debt on machinery should be in the 7% to 8% range,” Knuth said. “With $1,000 gross revenues [per acre], that leaves $70 to $80 per acre for machinery and equipment payments.”
Sustainable land debt levels between $250 and $300 per acre in annual payments work in all economic cycles, according to FCSAmerica.
“At $350 per acre, you’re already starting to push it,” Knuth said. “And $400 [per acre for land payments] tends to only work at the peak of [economic] cycles.”
3. Focus on fixed costs. These include the costs of machinery, family living, and owned and rented acres.
“These are what separate low-cost, medium-cost and high-cost operations,” Knuth said. “It’s your fixed costs that provide the most opportunity for adjustments going forward.”
4. Practice base borrowing on the current interest rate climate. In September 2024, the Federal Reserve started making cuts to the federal funds rate that tallied 175 basis points (1.75%) by the end of 2025. These cuts have been reflected in short-term loans. Conversely, long-term interest rates actually increased 40 to 50 basis points during that time, Knuth said.
“We do believe short-term interest rates will come down 25, maybe 50 basis points in mid- to late 2026,” he said.
That’s not so for long-term interest rates that fuel purchases such as land, as different factors drive short- and long-term interest rates. FCSAmerica projects stable long-term rates through 2026, with a slight uptick possible. Farmers who have been delaying refinancing in hopes of declining long-term interest rates may want to lock them in now.
“The possibility of a significantly lower long-term interest rate environment in 2026 is on the small side,” Knuth said.
5. Explore diversification. Farmers who built hog barns several years ago have garnered income and fertilizer during this economically difficult time. Ditto for income generated by farmers who expanded to trucking their own grain and livestock for others. Meanwhile, cattle producers continue to glean excellent returns.
These and other diversified income streams are more predictable than government support, Knuth said.
“It’s been stronger than expected,” he added. “But I think we can all agree that a business model that depends on checks from the government is not where we want to be.”
Be proactive
When the ethanol boom ended in the early part of last decade, the most successful farmers FCSAmerica works with quickly made adjustments.
“Everything was on the table, and everything was negotiable,” Knuth said. “So again, we believe proactive adjustments are just as important this time.”
Finally, here’s some good news:
“Grain production agriculture has adjusted to the reality of its revenue stream 100% of the time in the last 100 years,” Knuth said. “We already see this happening in this cycle again. At the end of the day, Iowa is one of the most abundant, productive and stable agricultural areas in the world.”