▶ Spring 2026 Ag Economics Outlook

0:06
Thanks for the introduction.

0:07
I appreciate everyone’s time here.

0:08
What I’m going to do is kind of just talk about a little bit what’s been happening.

0:12
A lot of you are aware of it, but it’s been making more and more national media attention.

0:17
And so these are some headlines I just grabbed.

0:19
You could Google these and find the actual articles.

0:22
But you know, back in these are start at the top left January, you know, the Farm Bureau put out some stuff about a bunch of the AG groups together put out the alarm about the farm’s future, how we’re under some lot of economic stress.

0:32
January 15th in the middle there, Jan February 5th, successful farming had, you know, AG leaders warned of of risk of widespread collapse of American agriculture.

0:40
This was a letter that a lot of the various former leaders of various AG groups and people that were like former politicians and stuff, a lot of the retired people.

0:52
So they’re no longer active in politics or in some of the other areas, you know. The national corn growers on the left there, America’s crop at risk, the future of corn and family farms.

1:02
They were very concerned.

1:04
Part of it’s a big long report by the Corn Growers Association, but you can Google that and find it it it has a whole section.

1:09
They’re very concerned about the economics of crop production, particularly corn.

1:14
March 19th in the bottom left there, Time magazine, the online version.

1:18
You know, US farmers are in crisis.

1:19
The Iran war is not helping.

1:22
The next day on the 20th American Farm Bureau Federation, you know, economic storm worsens for America’s farmers.

1:27
Relief should build on recent efforts to deliver for FBA program payments that came through our morning ad clips.

1:33
But it’s, you know, the Farm Bureau Federation and then the one here just from the a week ago on the April 2nd on the NBC, the national level, you know, is America on the cusp of farm of a farm crisis.

1:45
So you can see they’re talking about fertilizer and diesel.

1:47
We’ll touch it on that a little bit, but this has been happening more and more and it’s a it I’ll try to look at the data here and then we’ll talk a little bit about what a farmer or someone working with farmers can do.

2:00
This is USDA put this out on February 5th.

2:02
This are updated on farm income, net farm income, you know the money they make 153 billion that’s down a little bit from last year 25’s forecast, but it’s still above the 20 year average.

2:15
But the big and so it’s like, what’s the problem?

2:18
Well, the big problem is the it’s propped up by government payments.

2:22
This is government payments and billions of dollars since 2017.

2:27
Green is conservation program payments.

2:29
They’ve been 5 billion roughly for a long time.

2:32
That blue are ones that are price based.

2:34
So this is like for modern programs, ARC or agricultural risk coverage and PLC price loss coverage during margin coverage, DMC.

2:42
These are farm bill programs that are triggered by losses.

2:45
You can see that’s the blue and then that Gray are these all these other ad hoc programs that Congress has passed.

2:51
The big one during 2020-2021 is all those pandemic programs, the CFAP for and then the PPP program record highs we had well over.

3:00
These are all inflation adjusted now.

3:01
So that’s like 55 billion in current dollars.

3:04
It was much less back then, but you can see this year it’s really high, 44 billion, roughly 45 billion of which that’s the second highest we’ve ever seen it.

3:14
The only time it’s been this high is back during the pandemic.

3:17
Again, conservations, roughly 5 billion.

3:19
They’re projecting these farm bill programs, ARC, PLC, and Dairy margin coverage will be giving us about 15 billion.

3:25
But the other part is 25 billion in ad hoc programs coming out being paid in 26 ECAP, SDRP, FBA.

3:34
We’ll talk a little bit about these, but that’s about the same as last year, these big ad hoc programs.

3:40
So part of what’s been driving them or the the squeeze between cost and price and we’ll get to that more in a second here.

3:48
But I’ll start with the cost side.

3:50
This is the USDA Economic Research Service.

3:52
They put out these budgets, they go back, this is from 26 all the way back to 2020 for our major crops, corn, soybeans, wheat and oats.

4:00
But 917 is the national average cost of production up a little bit, about 3, basically 3% from last year’s forecast.

4:07
See the same thing for soybeans.

4:09
Wheat and Oats, you know, 3 it’s a little bit more than three.

4:12
These are at the end of mid-december last year just before Christmas, OK.

4:18
The UW extension budgets that we talked, they had at the beginning there that you can go look at, they have sort of a default numbers, corn at 9:52 and soybeans at 695.

4:27
These are Wisconsin typical estimates, but you know these other ones are national numbers which are going to be dominated by places like Iowa and Illinois because that’s where a lot of the corn and soybean acres are.

4:36
But you can see we’re a little bit higher than last year, about 5-6 percent, a little bit more than that national number, but you can see upward pressure on cost.

4:45
Where are the big changes coming?

4:47
This is as of December 18th, they just looking at the two crops, soybeans and corn, soybean in that yellowish color, corn in the green.

4:54
These are dollar per acre differences from the year before, so the 25 to 26 forecast.

4:57
Interest is down and fuel costs were down in December.

5:03
Where’s it up a little bit?

5:05
You can see a bunch of them, but where are the big jumps in that cost of production driving that 3% increase?

5:10
Machinery they have, there’s a down at the bottom.

5:12
The 4th one from the bottom is machinery, a couple bucks an acre for corn and beans.

5:15
Machinery fixed cost is much more, 8. The machinery variable cost, whatever is more like the the custom operating applicate paying custom applicators and some of the other variable things that you would do variable cost.

5:29
Machinery fixed are the the the capital recovery cost charges, the the cost of buying the the depreciation.

5:35
Those are the big ones there.

5:37
Those machinery costs in terms of actually buying and owning the machine are much higher up to they added eight more dollars roughly an acre.

5:45
The other big one then is land is up you know nationally about 6 and some 6 and some dollars.

5:51
Fertilizer, corn’s way up over $8 an acre, soybeans a couple of 3 bucks an acre for P & K mostly, whereas nitrogen you know drives the corn one.

5:59
So, definitely some upward pressure, but these have all been changing.

6:02
This is before the current when we started bombing Iran there.

6:07
So before this stuff, here’s the tariffs, contribution to machinery and some of those other costs we saw.

6:13
This is from February to October of 25, so last year.

6:18
This is just the tariffs paid on AG imports in almost a billion dollars.

6:22
This is data out of North Dakota State University using the data that’s available on those tariffs.

6:27
So you can actually get the things, everything that was brought in, but machinery, farm machinery being imported.

6:32
Over $500 million in tariffs alone were paid.

6:35
Then you got on the other the fertilizers, the seed and the ag chemicals, that was putting that upward pressure and all that stuff this on that machinery one, that’s still 3 or 4% increase.

6:45
There’s other factors going on there and it doesn’t include the cost of the metal.

6:48
If you’re making machinery in the US with imported steel that doesn’t show up in this tariff. Rental rates as the other land was up nationally, we went up, Wisconsin added some more, another 5-6 dollars, but 2 1/2 percent up.

7:02
This is this is from 24 to 25.

7:04
You can see it’s slowing down.

7:06
That curve has been bending over.

7:08
So if that continues 20, the 26 rent will be up say 2% relative to last year.

7:13
And these are state averages across the whole state obviously.

7:16
And the good producing areas are much higher than $166 an acre.

7:20
So those two continuing and that’s the machinery.

7:22
That’s a lot of that core source.

7:24
Some of that is just general inflation as well as these tariffs.

7:27
Land rents continue to rise.

7:29
The big one making the news lately has been the fertilizer and the fuel.

7:32
We’ll look at both of those here on the left is that DTN trends over the last several years, 25 rates are cost per ton are in green, purple is 24 and that dash Gray line is the five year average.

7:46
You can see every year from you know, February on up to you know, like May, there’s always an upward trend because it’s moving into the planting season.

7:51
There’s always an upper trend in prices, but in 26 we were on that trend sort of hitting that five year average and then boom, the bombing in Iran started the the straight was shut, prices jumped.

8:04
And so on the right are just the increase from the first week of March to the first week of April based off of these DTM data for a whole bunch of different fertilizers.

8:12
The one on the left is just urea.

8:13
You got your, your DAP map and potash.

8:17
You can see that, you know, a little over 0 percent is a rounding error.

8:20
It’s less than 1%, but you know, 2 to 4%, that’s that that general trend we see of increasing fertilizer prices as the planting season starts.

8:30
Big jump in all the nitrogen ones, Urea was up 38% from the first week of March to the first week of April.

8:35
All the liquid ones for nitrogen are up about 20%.

8:39
So you can see that’s what’s been happening there as a result of that.

8:42
The other thing you’ll notice, I think the green line really shows it there on the left.

8:47
There’s just the technical term is hysteresis, but prices go up quickly and they come down slowly.

8:52
You see how the prices spiked back there at 25 and then it took them a long time to slow down and then then they picked up again.

8:59
So what I anticipate even if this ceasefire lasts and it turns into a long lasting peace.

9:04
That red peak is going to have a long slow decline.

9:08
And that’s very common in these in these input markets.

9:11
So that’s nitrogen, This is diesel fuel.

9:14
You get these data from the federal government.

9:15
The web page is there.

9:16
The Federal Reserve Bank in Saint Louis puts them out, but there’s other sources.

9:20
This is the price of diesel fuel at the retail level, national average all the way back to 2020.

9:26
You can see how during the COVID pandemic it went down to less than two 2.50 a gallon.

9:32
and then it rose up as we started the economy picked up again.

9:37
We really had a big peak there in 2022.

9:40
Then there’s that long tail after we came down.

9:42
It doesn’t, they go up quickly and it’s come down slowly for a long time.

9:46
We’re in that 3.50 to 3.75 level.

9:49
And then in the last first, you know, March 2nd, April 6th, it was, it rose 45 percent, $1.75 a gallon is what it jumped.

9:56
And again, I would expect even if this ceasefire lasts and we have a lasting peace, there’s going to be that long tail where it takes a while to go back to the new equilibrium level like you see on the, the back there in the 2022 down to you know, where it got 24.

10:09
It just takes a while to go back to normal if you will.

10:12
So going back to this back in December, what would I add to this with these new recent changes?

10:18
Fuel prices would flip over and become a big jump.

10:21
Doing a little back the unbolt calculation, it probably adds 7 bucks an acre to the to the soybean, about $11.00 an acre increase for the corn on fuel charges that that’s so that would go off the chart actually on the nitrogen or I’m sorry for the corn. Interest is there’s talking about interest rates going up again because of the inflation continuing.

10:43
The other one on the fertilizer then would jump up a lot.

10:46
The yellow one for soybeans wouldn’t add too much because there’s not a lot of nitrogen used on on, on soybeans.

10:52
But the green for corn would jump.

10:54
It would add a lot.

10:55
Just all you got to do is take a 20% increase.

10:58
It’ll be, you know, it’s way up the chart there.

11:00
So it’d be off the chart again, be a lot of big increase because of fertilizer rates ongoing or costs going up again, a lot of farmers bought their inputs in advance.

11:09
Some of them waited.

11:10
And now given that that long slow decline, I think you’re really you’re risking not having availability and the price won’t come down a whole lot is my my guess.

11:21
Excuse me.

11:24
So now looking at what does this mean?

11:27
These are break even prices.

11:29
Taking the cost of production and divide them by the expected yields.

11:32
You get dollars per bushel needed to break even.

11:37
The top one is corn and and soybeans in Northern Illinois from University of Illinois.

11:41
In the middle one is Iowa State, same thing.

11:43
Then UW Extension, those budgets that Kevin Jarek’s group puts out with some help from everybody.

11:48
25 is in blue.

11:50
The first column is that break even cost of production to cover your cost.

11:55
And then the 25 blue on the right is the USDA projected farm price for the year we’re in right now.

12:00
And then 26 on the left is the cost and on the right is the projected price.

12:06
And so you compare to blue to blue and green to green, but what you see there is you know a 490 is the break even price in 25 and 26 for Illinois.

12:16
Same thing for a 462 for corn after soybeans.

12:19
Soybeans about $11.30 down to a little less than $11.00.

12:24
Iowa State’s again are right around that $11.00 for beans and that those numbers are very similar for a little cheaper on the corn after soybeans in Iowa.

12:31
Wisconsin is a higher cost producer.

12:33
We also have the yields aren’t as high, so we need a higher bushels or I’m, I’m sorry, price to break even because we don’t have Iowa and Illinois yields.

12:42
These are used in the state.

12:43
Average yields are there at 178, 51.

12:45
So you know, southern Wisconsin’s been much more like Northern Illinois or you know some of those parts of the state.

12:51
So that’s why I include them.

12:52
But you can see the projected prices are not there to cover these costs of production.

12:56
So in 25, the average Wisconsin farmers expecting negative margin about $1.10 for corn and $2.50 for soybeans.

13:02
26 before we even started planning the expected negative margin to somewhere in that $1.25 a bushel for corn and $3.30 for soybeans.

13:10
These are not using these new higher prices for fertilizer and or fuel and the effect that that will have on things like custom rates and stuff.

13:17
The other thing I emphasize is these are the full cost of production.

13:20
So these are paying for the land, paying for the management.

13:23
These are, if you don’t rent and you aren’t, you aren’t paying a big mortgage.

13:29
Those are for you.

13:29
Those are opportunity costs.

13:31
But for someone renting or paying mortgage, those are real costs.

13:33
And so in these management costs, you know, these are all, you know, that’s what we call the full cost of production.

13:39
But you can see the negative margins are big in particular here in Wisconsin, $1.25 and $3.30.

13:44
And then add in the effects of the, the recent uprun in fertilizer and the energy prices. And this is showing up in the data even before this Iran stuff has started.

13:57
This is from the Federal Reserve Bank in Chicago.

14:00
The map on the upper right is the where it covers.

14:03
It’s basically the I states, the big corn soybean areas of Iowa, Illinois and Indiana, big chunk of Wisconsin, not western Wisconsin.

14:10
That’s part of the Minnesota and then all the lower part of Michigan there.

14:14
But the, the red number is loan demand.

14:17
And this is an index from surveying all the ag banks in that blue district.

14:21
And the green is loan repayment.

14:23
And so what you can see back here, I’m just going to go back to 21/22/23.

14:27
The green is very high, loan repayment index is very high.

14:30
People are paying back their operating loans or paying back their making their mortgage payments.

14:35
They have a revolving line of credit each month they pay it off.

14:38
And the red is loan demand is very low.

14:40
They don’t need to roll over their rolling line of their line of credit.

14:45
They always pay it off.

14:46
But then he’s starting about 2324 as the margins for corn and soybeans were getting worse.

14:51
And in, in, in this is up through early 25, it switched over, repayments down.

14:57
It’s the lowest it’s been.

14:58
And you see all the way back to 2020 or 2005.

15:01
We have not seen the repayment index below this levels we saw just a little bit ago and and demand is is relatively high.

15:11
This is the same number on the bottom that green, that green line for index of loan repayment and really it really shows you the impact of crop prices on this.

15:19
This is for the whole 7th district, bottom lines that loan repayment index.

15:23
Now it’s just from January 2010 up to the beginning to match.

15:26
This is the monthly corn price in Wisconsin and you can see when does loan repayment index get high.

15:31
When the corn price is high, you can see it’s back there in Wisconsin.

15:34
10, 11, 12, 13 we had higher corn prices.

15:37
Loan repayment and index in the whole 7th District was high.

15:41
When Wisconsin has high corn prices, Iowa, Illinois, Indiana, all those other places have high corn prices when soybean prices tend to be high as well.

15:48
Then for years we had that low corn price in that $3.00 to $4.00 range.

15:52
Loan repayment index is around that 15-16 numbers that they have in their index and then again it rises up.

15:57
You can see how the commodity prices for corn and soybeans and stuff really drive that loan repayment index.

16:03
I’m going to go back a slide so you can just see this where what’s driving a lot of this green and red, the crossover from paying back your loans versus demanding more.

16:12
Crop prices matter a lot.

16:15
So what this shows up is in the bankruptcy data.

16:17
This is from the Farm Bureau up through 2014 or I’m sorry, 2024 way back to 2015 and the Wisconsin to be part of the Midwest there.

16:28
And then I add the number for 2025 in there just to for 315 is the national number.

16:34
It was 216 and 24.

16:36
So we’ve got another 100 farms and you can see this is up.

16:40
It was lowest during just that post COVID.

16:42
There’s a lot of shutdown of loan or I’m sorry of foreclosures and the whole system.

16:48
But the big thing is this doesn’t capture everything.

16:51
There’s some recent work from the some folks at Auburn University using FSA data for bankruptcy filings, which you can FOIA request back from 2008 to 2023.

17:03
The average during that time period is that 56% of farmers with FSA loans in foreclosure, they chose Chapter 711 or 13, not Chapter 12, the agricultural one.

17:14
And so if you do make that correction factor hold, assuming that holds nationally for 25, that means that that 315 well, there’s actually 2.33 times more.

17:26
So that would mean there are 734 farms that had foreclosure including that.

17:31
But that only is the FSA farms doesn’t include the non FSA bankruptcies, people using private, not going through the Farm Service Agency and then having to foreclose.

17:42
And it also misses all the farms that financially reorganized to prevent having to go into foreclosure.

17:48
And so you can see there’s a lot of financial stress out there.

17:52
Let me do slide up.

17:52
This is that hole.

17:53
You can see how it was really high beforehand and COVID hit prices shot up.

17:57
And then here it is.

17:58
We’re starting to come back up again at National.

18:00
We’re at 315, looking at Wisconsin, you see the same trend peaked up at 69 in 2020.

18:06
Here comes the COVID pandemic.

18:07
It slows way down, but we’re up to 16.

18:11
I mean 2025 at the end of the year you do that little correction factor that means there’s probably 37 if you include the ones that use a different chapter.

18:20
This is our best guess that people not using chapter 12.

18:23
But again, it’s missing the FSA or non FSA bankruptcies and farms are reorganized to prevent having to go into bankruptcy, but maybe liquidated everything and stopped farming and rent the land out, rent the buildings out and such.

18:35
So this is definitely a sign of financial stress out there though between the farm, the stuff out of the Chicago Federal Reserve and then this data on bankruptcies alone.

18:44
To me that tells me we’re at some financial stress.

18:48
Government supports been happening, you know, still these Gray boxes in the those government payments, those ad hoc payments.

18:54
This is over the roughly the last year we’ve seen a lot of money flow out of DC back in March, 19 of 2025 is when they started sending out the ECAP payments.

19:03
Wisconsin received 235,000,000 that’s been closed for a while, but that was over a year ago.

19:09
That money was flowing out SDRP Wisconsin saw 154,000,000 that’s still open for phase two, but most of that money’s gone out, you know, work with your crop insurance person or talk and talk to FSA to get those payments.

19:22
But a lot of you already did that, I’m assuming and then ARC payments went out.

19:27
This is it was delayed because of the shutdown, but Wisconsin saw 117 million, mostly for corn at the national level and soybeans.

19:34
Those two drove 75% of the payments.

19:37
Farmer bridge assistance, though I couldn’t find any data that’s not up on their dashboard yet at the USDA, but those should be should have gone out in March.

19:46
They started making be paid according to the government on February 28th and I estimate Wisconsin had somewhere around 260 million just taking those payment rates there in that line times the number of planted acres.

19:58
So we had a lot of money go out there.

20:00
The only thing left if nothing changes right now is ARC and PLC payments should be coming in September/October of 26 and normally you would enroll already in March 15th, but they’re going to talk about enrollment this summer happening.

20:15
So you’re going to know and have a good guess of what’s going on there.

20:18
And the reason they’re delaying enrollment is because in the one big beautiful bill, we’re adding more base acres.

20:25
The nationally we’re going to add 30 million more acres to the of base acres to the programs or program acres.

20:30
Whatever you want to call it to become eligible for ARC and PLC payments?

20:34
And that enrollment is probably going to be announced early May here in Wisconsin with the communicating with some of the FSA people I know.

20:41
And so wait, so about the time farmers are really getting busy with planting, here will come the FSA with some and it, you know, forms to sign it, it’ll be much more electronic and everything, but it’s a, it’ll be based off your planted acres in years past.

20:54
And it’ll be, it sounds like there might be some reallocation of acres as well as adding new base acres.

21:01
So you’ll be able to add some new base acres.

21:03
So that’s why they’re delaying.

21:04
But that’ll be the next big thing.

21:07
Unless there’s some new ad hoc program, there won’t be any more payments from the government until the fall of 26.

21:14
This is an estimate of what those payment rates will be.

21:16
This is back.

21:18
We wrote this a little article about a month ago.

21:22
Will come out this fall.

21:23
But you can see like I’m looking at Dane County where I’m at, $69.00 is the payment rate roughly for corn.

21:28
That’s an estimate.

21:29
It still depends on county yields and national prices, but that’s you can take that time to 88% to get the actual payment.

21:36
So that’s like 61 bucks an acre for corn.

21:39
Soybeans would be the payment rate is 25 ticket times 88%, a little over $20 here in Dane County.

21:44
But it’s the standard stuff.

21:46
Its highest down the southwestern part of the state.

21:48
And then as you go north it it it declines.

21:52
But that’s gives you a sense of what’s coming here for ARC payments, what the projections are.

21:58
The other big change what this year was ECO and SCO enhanced coverage option and supplemental coverage option.

22:05
What these are, are policies you put on top of your revenue protection, which is the traditional individual coverage that most farmers buy here in Wisconsin.

22:14
What they did this year with the one big beautiful bill is they greatly increased the subsidy rate.

22:18
So farmers are only paying one fifth of the cost.

22:21
They used to pay about 1/3, so 35%.

22:24
Now it’s only 20%.

22:26
ECO and SCO we saw a big jump in their demand for them.

22:30
And what these are is you if you have a 75% revenue protection, that first 25% of your, when your revenue is 25, you know say 20% below your average, you don’t trigger any payments.

22:41
That first 25% is your deductible.

22:44
What ECO and SCO do is they allow you to cover that deductible as with a county level policy with the area wide coverage policy.

22:53
And so with these two programs when you add revenue protection on and SCO and ECO, you can guarantee 95% of your expected revenue, locking it in that’s the insurance revenue.

23:05
So your APH yield times your the, the crop price, the like this year it’s 462 for corn from the board of trade.

23:13
That’s what they use to get your expected revenue and then the coverage is so you can lock in 95% of that.

23:18
Back in 25, we had a roughly 30% of corn acres had ECO and 20% of soybean acres had ECO.

23:26
They also relaxed the SCO ARC require or prevention.

23:33
You could not sign up for SCO or buy SCO unless you unless you used PLC.

23:39
And so you can see on the right table in 25, the only about 2% of corn, soybean acres were using SCO on top of these on top of RP.

23:47
And so it’s this, it’s, I don’t know quite why we have an ECO and SCO, but ECO goes from 95% down to 86% of of that of your deductible and then 86 down to your wherever your RP coverage is, where SCO covers.

24:02
And so you can take your RP coverage that leaves off at 75%, say 75 to 86% will be the SCO band and then from, I’m sorry, 86% and then from 86% up to 95% will be the ECO band.

24:15
And so you can see farmers are definitely starting to buy ECO.

24:19
I’ve looked at these data just this yesterday and we, we do know how many policies were sold.

24:25
We don’t know how many acres are in there yet, but there’s been a tremendous increase in the number of policies.

24:30
And so I’m projecting a guess as to how many acres, what percent of acres will be covered.

24:35
So on the left side there in blue is ECO policy sold in 25 and 26 for corn and then 25 and 26 for soybean.

24:43
These are the number of policies sold.

24:44
So like in Wisconsin in 2025 for about 4000, ECO policies were sold in 25, hardly any SCO policies.

24:53
You can see the small little number here on the far left of the orange spot.

24:58
But this year 26, almost 8000, almost double the number of policies were sold.

25:02
Soybeans had a massive jump in, I mean SCO had a massive jump as well.

25:07
Same story on soybeans.

25:09
It went from like 2700 policies to over 6000 policies for ECO and SCO jumped from the say 3-4 hundred and up to well over 2000.

25:21
You take you can do so if the number of take that number of policies we saw back in 25 at this time and then the eventual number of acres get that factor how many acres per policy take that times these numbers of number of policies and then divide by the expected plant acres and blah blah blah.

25:36
What’s my projection?

25:38
About 60% of corn acres in 26 in Wisconsin will be covered with ECO and about 20/18/19 percent will be covered with SCO and soybeans.

25:51
It’ll be about 25% would be covered at the ECO and about 12/10/12 percent with SCO.

25:56
Most people that do SCO are combining with ECO.

25:59
And so you can kind of see we’re going to have a lot of people, especially on corn bought the ECO.

26:03
Well over half is what it’s going to be for this year.

26:06
So these farms are locking in most likely 95% of their expected revenue with an insurance policy, a mixture of that combined county and individual coverage.

26:17
So what are the effects of all these ad hoc programs and then these new changes in ECO/SCO?

26:23
We’ve basically seen about $30 billion in payments from the programs that did not exist a year ago.

26:28
Last year at this time, Well say, well say, say in February, we had there was no ECAP, there was no SDRP, there was none of this FBA stuff.

26:36
We’ve spent about $30 billion.

26:38
Wisconsin received 750 million of this, about 84% was in these ad hoc programs that did not exist the year before.

26:46
And that’s what the reality of our political situation, this gridlock and all these continuing resolutions and stuff, we’re locking in these outdated policies and programs.

26:54
We just, we get all these ad hoc programs.

26:58
So what is this effect of these not really having a coherent foreign policy?

27:04
Projecting your cash flow is very complicated.

27:06
Those negative margins I was talking about back there, those are all without these government payments, but it’s really difficult.

27:13
So like if it’s that 20, that’s the 26 expected margin, do you include the ECAP payment they receive?

27:19
Well, let’s do the 25 one, I guess.

27:21
Do you include the ECAP payment they’re going to receive for those that ECAP is for 24 planted acres, but they receive it at 25.

27:27
Do you include that as part of your margin?

27:28
SDRP is the same thing It’s for losses that occurred, disaster losses at 23 and 24, but do you include it as part of your, your gains in the, in the 25 crop year?

27:39
That’s when you receive the money and so you can kind of see it really makes cash flow projection difficult.

27:44
When you don’t know these things are coming, you don’t understand it, you can’t project ahead and that makes it difficult.

27:50
Do you, do you buy this new piece of property?

27:52
Do you, do you take this rental agreement?

27:54
Do you invest in the new building?

27:55
Do you buy a big new piece of equipment like a combine or planter?

27:59
When you’re not sure what your margins are going to be in these these these payments, you just don’t know what’s going to happen.

28:03
It doesn’t really solve the underlying problem of high price or high cost and low prices.

28:08
How are we going to address those?

28:11
Also these things like the especially the ECO and SCO and there’s these payments that keep showing up, these 25 billion in the last two years, they’re going to get capitalized into land values.

28:20
So it makes it hard for people to get into the business.

28:23
It makes it harder to sell it.

28:25
It attracts institutional buyers that are buying up and then renting the land out.

28:30
And my real worries that they incentivize or reduce incentives really to innovate when we face a global competition.

28:36
I’m really thinking about soybeans in Brazil.

28:39
They’re, they’re, they’re, they’re, they have, they have 50% more acres than we do.

28:43
And their yields per acre yields are the same.

28:45
On average, they’re doing really well in soybeans.

28:48
They have 120 million acres and their yields are the same as ours.

28:51
You know, we have like 85 projected for 2026.

28:54
And so they’re just a much bigger and are we competing with them?

28:57
You know, how, how do you, and if you’re going to get these payments, you don’t have to keep up.

29:03
And then the last thing that worries me is how long will the political support continue for these ad hoc programs.

29:07
I’m worried that eventually that we’re all going to say no, no more payments, and then we’re going to go through a massive restructuring to right size and number of acres we have planted to these crops and that’ll be very painful.

29:20
So what can a farmer do?

29:21
This is this link should be in the chat eventually, if it should have been already a couple years ago, I guess four years ago we did this.

29:29
Balancing sustainability to innovation.

29:31
It’s a 16 page extension publication with 75 to 100 recommendations, management options for farmers to consider.

29:38
Many of these are practices that farmers might already do.

29:41
Many don’t even apply to them.

29:42
But I tell farmers, I talk about these things, I’m guessing you could go through that list and get 3 or 4.

29:48
And what these are are sort of the collective wisdom of a lot of the state extension specialists, nutrient management, insect, weed and disease management on cropping systems, crop rotations, on machinery, how to do, how to do a better job to be sustainable, make sure you’re breaking even at least, or covering your costs, maybe make some money, but also being innovative, trying to improve yourself. And you don’t risk the whole farm on something yet, you know.

30:12
You try 3 or 4 is what I suggest to look for something you’re not doing that you think you could actually apply to you and might help.

30:18
There’s the the QR code and stuff, you know, but I’m really, do we need to update this?

30:23
Do we need to re energize this program?

30:24
Because it’s extremely relevant.

30:27
This, this, this thinking about this, how do I improve my nutrient management?

30:30
How do we improve my insect management?

30:31
How do we improve my cropping systems machinery?

30:33
Farmers are going to be asking these questions.

30:37
So summer 24 was hard, 25 is rough.

30:39
26th it looks to be another bad year.

30:41
Working capital is low.

30:43
Cash flow is a serious issue for many farmers.

30:45
Most vulnerable are the ones that are highly leveraged and with lots of rented land.

30:50
You, you highly leverage.

30:51
You got to make those.

30:52
You got to make those mortgage payments or debt payments.

30:55
If you’re renting, you got to make those payments.

30:57
Those are not opportunity costs for you.

30:58
Those are real costs of production.

31:01
And then older farmers with no heir, they’re not sure they want to stick around for the next time.

31:05
There’s an upward swing in crop prices.

31:08
So I’m worried that those are the three that are most vulnerable to saying, you know, I’m done.

31:13
Ad hoc government programs will help with cash flow and margins, but they will not solve that problem of high costs and low prices where it’s a global competition now.

31:21
And I’m worried these payments can make us lazy.

31:24
I’m really telling farmers to look to their advisory team for help on how to improve.

31:27
That’s what that that document was that I just had the previous slide.

31:30
So that’s your

31:31
Extension educators and specialists.

31:33
You got your Co-op agronomist, your crop consultants, your grain marketers, you crop insurance agent, your lenders.

31:40
These are the people you’re going to have to rely on and for advice and thoughts on what to do.

31:45
We’ve been through these times before for the people that are at least middle age.

31:48
And so they have a lot of wisdom and talk to them if you don’t if you’re young.

31:53
So I’ll pause there.

31:54
The only thing I’ll put up is that’s that link to the custom rate survey that should be in there.

31:58
We’re looking for people to respond to the custom rate survey.

32:02
Thank you, Paul.