By Joseph Peiffer
Founding Attorney

At nearly the halfway mark, 2026 is providing farmers with some of the most challenging economic times they’ve seen in a generation. This is from a combination of lower commodity prices than what they were seeing just a couple or so years ago, to increases in fertilizer, chemical, and other input costs.

On the plus side, the One Big Beautiful Bill Act that Congress enacted last year contained safety net mechanisms that increased the statutory reference prices for key crops including corn and soybeans. This means higher ARC and PLC payouts are likely to be triggered. And the USDA is disbursing one-time bridge payments to some growers from a $12 billion fund announced to help offset losses stemming from tariffs President Trump put in place.

On the down side, adding to the tariff-related losses and lower commodity prices are 50 percent higher fuel costs and other elevated input expenses because of the Iran war and subsequent difficulty getting products through the Strait of Hormuz.

The payments mentioned above are better than nothing, but they’re a bandage — not a solid fix. Farmers would rather have stable, dependable markets for their products, than what they view as handouts. Instead, many are projected to lose money on the corn and soy acres they’ve planted this year. This is leading them to consider hard decisions, which is always better tackled sooner than later.

Our office is receiving more calls than at this time last year, from farmers seeking help with debt restructuring or filing for Chapter 12 bankruptcy. I would have expected to hear from more in January or February than since mid-April, but that has not been the case. The first cash rents for the new farmland lease year were due March 1, and if a farmer was going to decide they wanted to trim their expenses or restructure debt for 2026, they had more options in January-February than they now have.

Those who were unsure but pressed forward with renting to plant more anyway may have figured they could use their bridge payment to get through this season and then reevaluate after harvest. They were not expecting war nor its effect on expenses.

(319) 363-1641

Potential Income Options

Farmers who have significant operating capital and/or little to no debt are probably safe to weather 2026 to farm another year. That doesn’t mean they won’t lose money. But what does this year mean for those who don’t have that kind of capital and do have debt? If this is you, what can you do between now and harvest time to protect your financial interests?

One of the first steps will be to review planned inputs for this summer. For example:

• Is it going to be economical to spray fungicide?
• When that time comes, will your crop require application — are projected yield gains going to be more than enough to offset product, fuel, and possibly labor costs?

It’s not that growers don’t normally consider this anyway, but 2026 will require even more examination of expenses versus return. If it looks like you’re only going to trade dollars one-for-one, why do it?

If you can’t trim expenses enough to meet financial obligations, including loan and other debt payments, you may need to earn more income through an off-farm job, contract work such as harvesting or hauling grain or livestock for others, or finding other ways to add value to your operation.

I have a client who has set up a transloading platform at his farm, where he can load crops and other commodities into containers to be shipped for export — this increases the price of his product by 50 cents per bushel. Other exporters have recently begun paying him to use the platform for their products as well. In addition, he recently attracted outside investment into opening a mixing facility to be able to ship specialized product to South Korea — an established mixing facility recently closed, so he took advantage of the brief market vacuum to fill a need.

If you are a farmer with sufficient equity and liquidity, and vision, to do something like this right away, it’s certainly something to consider. But if this is not within your means and you don’t have an investor — and it won’t be, for most farmers — perhaps there is another way you can add value to your operation or find a market niche either without such a large investment.

What should you be doing?

If margins are tight but you are nonetheless making money this year, don’t be afraid to pay the taxes you owe. Borrowing to purchase equipment you don’t need right away, just to claim a large deduction against income and to lower taxes, might hurt you in the long run. The key here is “borrowing” — going into loan debt isn’t necessarily smarter than paying taxes, if you’re going to owe the bank for a while.

If you can see that you will struggle this year to make loan payments, talk with your banker now. I can tell you after more than 40 years of this work that the farmer who comes to the bank, acknowledges their problem, and proposes how they can help solve it typically has more luck getting the bank to help them rework the loan than those who put off such a meeting.

It’s never great to have the banker come to you after a default, when you had not told them that you would not be able to meet your debt service obligations.

Finally, if your financial problems run deeper than one loan, it may be time to analyze operations and think about serious restructuring. Ag & Business Legal Strategies offers enterprise analysis, which reviews your liabilities and assets, revenue and expense streams, and shows you where you are losing and making money so you can decide how to move forward.

If after this step you are still unsure how to proceed, our attorneys can help by reviewing options. Whether it is refiguring your operations, or needing to restructure debt or file for bankruptcy, Ag & Business Legal Strategies is dedicated to helping farmers work toward an outcome that is beneficial for their unique situation.

(319) 363-1641

At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our team will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy.

Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow, when it may be too late.