How Temporary Highs Could Lead to Extended Lows

You’re a row-crop farmer in the Midwest. Your 2026 opened with market challenges, and they really haven’t eased up; if anything, things got more precarious, with spiking input costs and breakeven commodity prices at planting that dipped in June for corn even more than soybeans.

If you held off on selling and were rewarded with being able to move your own corn or soybean pile for a bigger check in the recent price recovery, congratulations! If you ended up with more revenue than immediate expenses took out of that, it’s important to be wise in how you spend it.

It’s not an investment if you can’t afford it

Farmers are a smart group of businesspeople—but they’re not necessarily immune to what I call a “casino high,” or the feeling of immense relief at getting a sizable win after a demoralizing losing streak. Some may feel so relieved, in fact, that they are considering big-ticket purchases such as equipment or land. And although real estate is often a wise investment, it’s not if it is going to put you far deeper into debt when you are already struggling.

If a farmer has been making do with an old piece of equipment, maybe it feels like it makes sense to use some or all of that unallocated income to upgrade to a later model right now. For one, it’s a tax deduction, and you’re worried about income taxes on those corn and bean profits, right? Also, you only need a down payment because you’ve known the banker for 20 years and they’re willing to loan you the rest.

But, consider this. Most farmers expense equipment immediately. That saves on taxes now, but it means a bigger tax bill if you sell quickly—as you might have to if buying this equipment pushes you under.

Profitability is tied to the management decisions a farmer makes that generates income, whereas money in the bank can ebb and flow. History tells us that commodity price spikes do not happen predictably. Just because you have money in the bank does not automatically mean profitability. In fact, we explained this in a blog post a few years ago, that I encourage any farmer to give a quick read.

Adding more to your debt load with a stressed cash flow, that only recently made extra money because of an atypical fall price run-up, is a recipe for disaster. This is especially true if market predictions hold true that the cost of planting inputs, fuel, and cash rent are likely to remain high or even increase going into spring 2027.

Know your options

If you had already made plans to purchase equipment or land before the recent price increases, and had budgeted accordingly and determined you could afford to do so, that’s a different situation than the point of this article. Here at Ag & Business Legal Strategies, we want to help farmers avoid going deeper into debt. Sometimes that means helping them restructure their debt or file for bankruptcy. Sometimes, though, it means providing advice on operations and finances that may help farmers avoid the stress of making decisions about overwhelming debt.

If you are a farmer who expects a windfall because of recent corn or soybean sales, you’ve already budgeted for high 2027 input costs, and you have money left over, you do have options. You could apply that to the principal of a loan and get ahead on paying it off, or you could put it in the bank. You could invest wisely.

And yes, you could put a down payment on equipment or land, but only if it makes sense in your cash flow. If you haven’t budgeted or won’t have money left over—hold up before making any large purchases! You’re not prepared to do so, even if neighboring farmland won’t be on the market again for another couple decades.

I advise you to consult with a financial advisor before spending, even if you are not in debt. If it’s been a while since you had an enterprise analysis done on your farm, or you’ve never had one, our office provides that service.

And for those farmers who are dealing with debt, whether or not they were able to sell high lately, call our office. We can set up an appointment to discuss your situation and review your legal options. Reach out to us sooner than later. Don’t gamble your farm or future on a casino high—remember, you want the farmhouse to win, not the house.

(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.