Rising Costs, Falling Prices: Regional Disparities Deepen Farm Financial Stress

by Rwit Chakravorty, Shawn Arita and Francis Tsiboe

U.S. crop producers face mounting financial pressure as production costs remain elevated while commodity prices have fallen to multi-year lows. This year's corn crop is projected to reach a record 16.8 billion bushels, far surpassing 2024 levels and creating an oversupply that markets struggle to absorb. Combined with uncertain trade policy, prices have declined sharply. Meanwhile, forecasts indicate costs will rise further in 2025, driven primarily by higher fertilizer prices. While all crop-growing regions feel this squeeze, some face disproportionate challenges due to varying production costs across USDA Economic Research Service (ERS) farm resource regions.

Figure 1: Total Production Costs by Region (2015-2026F)

Source: ARPC using USDA ERS Commodity Costs and Returns data.

Figure 1 shows that total production costs per acre peaked in 2022 following pandemic-era input price shocks and remain significantly elevated through 2024, with substantial regional variation persisting across crops. Forecasts for 2025 and 2026 predict further increases in costs.

Corn costs surged to nearly $930 per acre nationally in 2022, settling at $890 per acre in 2024. The Heartland region consistently bears the highest burden, reaching $950 per acre in 2024, approximately $60 above the national average. In contrast, the Northern Great Plains maintains the lowest costs at $770 per acre, roughly $120 below average. This creates a $180 per acre disparity between the highest and lowest cost regions.

Soybean costs follow a similar pattern, peaking nationally at $640 per acre in 2023 before declining slightly to $630 per acre in 2024. The Mississippi Portal region faces the steepest costs at $710 per acre in 2024, which is $80 above the national average. The Northern Great Plains again shows the lowest costs at roughly $510 per acre, approximately $120 below average. The regional gap of $200 per acre has remained consistent throughout 2022–2024.

These regional differences mean farmers in high-cost areas operate with substantially thinner margins, making them more vulnerable to price volatility and increasing their financial stress during periods of weak commodity markets.

Figure 2: Changes in Production Costs by Component (2025F vs 2020)

Source: ARPC using USDA ERS Commodity Costs and Returns data

Comparing 2025 forecasts to 2020 levels (Figure 2) reveals dramatic cost escalation across nearly all input categories. Total production costs are projected to increase $219.10 per acre (32.3%) for corn and $147.30 per acre (30%) for soybeans. Total operating costs show particularly sharp increases of $129.80 per acre (40.7%) for corn and $63.70 per acre (35.6%) for soybeans. Fertilizer emerges as the top driver, surging $50 per acre (44.8%) for corn and $17.50 per acre (61.3%) for soybeans, reflecting the compounded effects of pandemic-era supply chain disruptions and the recent evolving trade environment. Allocated overhead costs increase $89.40 per acre (24.9%) for corn and $83.60 per acre (26.7%) for soybeans. Capital recovery of machinery and equipment leads this category with increases of $41.70 per acre (32.6%) for corn and $37.70 per acre (35.3%) for soybeans, driven by sustained equipment price inflation. Meanwhile, revenues are projected to increase modestly-$91.60 per acre (14.2%) for corn and just $11.80 per acre (2.3%) for soybeans-falling far short of the cost increases and creating an intensifying margin squeeze.

Figure 3: Changes in Production Costs by Component (2020 vs 2015)

Source: ARPC using USDA ERS Commodity Costs and Returns data

Going further back, comparing costs in 2020 with those in 2015 (Figure 3) shows a starkly different picture. Total costs increased modestly-just $2.80 per acre (0.4%) for corn and $28.60 per acre (6.2%) for soybeans. Total operating costs declined $14.50 per acre (4.4%) for corn, driven primarily by fertilizer price decreases of $25.80 per acre (18.8%). For soybeans, operating costs rose only $12.10 per acre (7.2%). This earlier period of relative cost stability contrasts sharply with the post-2020 surge, highlighting how dramatically the cost environment has shifted for producers in recent years. During the 2015-2020 period, revenues increased $32.10 per acre (5.2%) for corn and $93.60 per acre (21.7%) for soybeans, indicating that producers experienced improving margins.

Importantly, the calculations in Figures 2 and 3 use U.S. averages; regional basis differentials can intensify the squeeze, particularly in areas like the Northern Great Plains where transportation costs and local supply-demand dynamics often result in prices below national benchmarks. The combination of modest price forecasts continued cost inflation, and regional basis risk signals challenging profitability for both crops in 2025.

The data reveals persistent and substantial regional disparities in production costs that compound the financial stress facing U.S. crop producers. High-cost regions like the Heartland and Mississippi Portal face per-acre costs significantly above national averages, while revenue pressures affect all producers. With total production expenses forecast to increase substantially in 2025, driven by renewed fertilizer price increases, and commodity prices remaining depressed, many producers will operate with negative or razor-thin margins.

These conditions highlight regional differences in producer vulnerability. Producers in high-cost regions with weak local basis will require particular attention as the sector navigates this prolonged period of compressed margins. The combination of elevated costs and depressed revenues threatens farm financial health and the productive capacity of agricultural regions..

Related Research and Policy Analysis by ARPC Economists:

Hagerman AD, Schaefer KA, Van Leuven AJ, Tsiboe F, Young AM, Zereyesus YA. Mitigating Structural Inequities in U.S. Agricultural Risk Management. Journal of Agricultural and Applied Economics. 2025;57(1):86-113. doi:10.1017/aae.2024.29

Tsiboe F, Zhao H. Crop Insurance Premium and Interest Deferrals in a Time of Rising Farm Costs. Agricultural Risk Policy Center, North Dakota State University; September 14, 2025. https://www.arpc-ndsu.com/post/crop-insurance-premium-and-interest-deferrals-in-a-time-of-rising-farm-costs