After the cancellation of the local farm-to-school program, I began to dig pretty deep into the curent state of U.S. agriculture, since I am a vocal advocate of local farmers (I support two Maine CSAs, annually), and — well — food is fairly important in general and when it comes to national security.

This is a pretty longform piece, but I've tried (with the help of Claude—with proofread results) to prefix each section with a TLDR for folks that struggle with longer texts. If you need an even shorter TLDR, the description in the post's blog index card has the essence.

And, if you really just want to know the score: thanks to existing and forthcoming capricious and malicious cuts to domestic agriculture support programs — combined with the sheer insanity of our new tariff and border policies — American farmers are — to put it mildly — screwed.

Jump to the very end to learn how you can help.

The Pre-Existing Financial Crisis in American Agriculture

American farmers are facing their worst financial crisis since the 1980s:

  • Farms are rapidly depleting their working capital (cash reserves and liquid assets) that should ideally cover at least two years of losses
  • This crisis results from rising input costs (fertilizer, seeds, equipment) combined with falling commodity prices (corn dropped from $6-7 to $4-5 per bushel)
  • Many farmers are now producing crops at a significant loss despite good yields (rice producers project losses of $345/acre; corn/soybean farmers $250-280/acre)
  • Agricultural lenders expect only 58% of farm borrowers to remain profitable in 2024, down from 78% last year
  • Many farms have "burn rates" indicating they'll exhaust financial reserves within two years if conditions don't improve
  • Labor shortages further strain operations as agricultural workers (70% of whom are foreign-born) leave for better-paying construction and food service jobs

American farmers face a financial reckoning unlike anything seen since the 1980s farm crisis. What began as manageable financial pressure has evolved into a severe liquidity crisis threatening the very foundation of domestic agriculture. Agricultural lenders across the country report a disturbing acceleration in the depletion of working capital—the financial cushion farmers rely on during economic downturns.

Working capital represents a farm's ability to meet short-term financial obligations without disrupting operations. It encompasses cash reserves, accounts receivable, and marketable inventory that can be quickly converted to cash. For years, financial advisors have recommended that farms maintain working capital sufficient to weather at least two years of losses. Today, many operations have fallen well below this threshold.

The current crisis stems from a perfect storm of economic forces. Input costs for essentials like fertilizer, seeds, equipment, and crop insurance have risen dramatically, while commodity prices have simultaneously declined. Corn prices, for instance, fell from $6-7 per bushel to $4-5 by the end of 2023, effectively wiping out profit margins for many producers. This price-cost squeeze has created consecutive years of losses across multiple agricultural sectors.

Regional variations reveal the depth of the crisis. Parts of the Southeast are now experiencing their third or fourth consecutive year of financial losses. Rice producers report projected losses of approximately $345 per acre, while corn and soybean farmers anticipate losses between $250 and $280 per acre. These figures represent more than statistical concerns—they reflect the reality that many farms are producing crops at a loss despite achieving good yields.

The 2024 Ag Lender Survey, conducted jointly by the American Bankers Association and Farmer Mac, underscores the gravity of the situation. Lenders anticipate that only 58% of agricultural borrowers will remain profitable this year, a dramatic decline from 78% the previous year. This assessment has triggered what industry insiders describe as "difficult conversations" about the future viability of many operations.

Financial analysts use the concept of "burn rate" to quantify how quickly farms are consuming their financial reserves. This metric, calculated by dividing total working capital by projected annual losses, provides a sobering timeline for how long an operation can sustain losses before exhausting its financial cushion. Many farms now have burn rates below the critical threshold of 2.0, meaning their financial reserves will be depleted within two years or less if current conditions persist.

Labor shortages compound these financial challenges. The agricultural workforce, of which 70% of crop farm employees were born outside the U.S., faces increasing competition from construction and food service sectors. This competition has drawn workers away from agriculture, adding operational constraints to already strained farm finances. These stresses are compounded by the sweeping changes to U.S. border and deportation policies.

Government Cuts Deepen Farm Financial Crisis

The Department of Government Efficiency (DOGE) has eliminated over $3 billion in USDA program funding, severely impacting already struggling farmers:

  • Key programs cut include the Local Food for Schools ($660 million) and Local Food Purchase Assistance ($500 million) programs that many farmers had relied on for stable income
  • Farmers had already made investments based on these programs - like Buffalo Ridge Orchard, which planted 1,500 additional trees (20% capacity increase) and now faces a 15% income reduction
  • DOGE closed Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), and Rural Development offices in at least 24 states, reducing access to remaining support programs
  • Cancellation of environmental compliance reviews ($8.2 million) has paralyzed conservation implementation - about two-thirds of farmers in conservation programs can't proceed with planned improvements
  • Widespread layoffs of technical staff (38 at Conservation Districts of Iowa, potentially 60 at Pasa Sustainable Agriculture) eliminate expertise farmers need to implement efficiency-enhancing practices
  • Many farmers now face debt obligations without the anticipated income to service them, potentially triggering broader financial distress in rural economies

Against this backdrop of financial fragility, the newly established Department of Government Efficiency (DOGE) has abruptly terminated multiple USDA programs, eliminating over $3 billion in annual funding that many farmers had incorporated into their operational plans. These cuts could not have come at a worse time for the agricultural sector.

The eliminated programs include the Local Food for Schools program ($660 million) and Local Food Purchase Assistance program ($500 million), which had created reliable market channels for many small and specialty producers. The timing of these cancellations is particularly problematic, as many farmers had already made investments based on anticipated program participation.

Buffalo Ridge Orchard near Central City (Iowa) provides a telling example of the immediate impacts. The operation had planted 1,500 additional trees—a 20% capacity increase—specifically to meet demand from school programs that have now been eliminated. They face a potential 15% income reduction that may eliminate any profit for the year. Similarly, beginning farmers like Mari Hunt Wassink had planned significant expansions based partly on these programs and now question whether they can secure necessary financing.

Beyond direct financial assistance, DOGE has directed the closing of Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS), and Rural Development (RD) offices in at least 24 states. These closures reduce farmers' access to remaining programs and technical support at precisely the moment when they most need guidance to navigate financial challenges.

The cancellation of the $8.2 million Clark Group contract for environmental compliance reviews has effectively paralyzed conservation implementation for many operations. These reviews are legally required before farmers can install conservation practices like improved grazing management systems or waterway buffers. Without this service, program administrators report that about two-thirds of farmers in conservation programs cannot proceed with planned improvements.

The layoffs resulting from these cuts further erode support infrastructure. Conservation Districts of Iowa has laid off 38 employees who provided technical expertise on conservation efforts statewide. Pasa Sustainable Agriculture reported it may need to lay off 60 people—70% of its staff—if funding isn't restored. This loss of expertise decreases farmers' ability to implement efficiency-enhancing and cost-saving practices when operational improvements are essential for survival.

For farmers who had incorporated expected federal payments into their financial plans, these cuts create immediate cash flow challenges. Many have already made investments based on signed federal contracts, in some cases taking on debt to fulfill their side of agreements. With payments frozen or canceled, these farmers now face debt obligations without the anticipated income to service them, potentially triggering a cascade of financial distress throughout rural economies.

Project 2025's Impact on Agricultural Policy

Project 2025 proposes major structural changes to agricultural policy that could worsen farmers' financial situation:

  • The blueprint advocates separating agricultural provisions from nutrition programs in the Farm Bill, moving the Food and Nutrition Service to HHS, and implementing stricter eligibility requirements for nutrition programs
  • This would dismantle the decades-old coalition between agricultural and nutrition interests that has traditionally secured support for comprehensive farm policy since the 1970s
  • USDA's role would narrow to primarily focus on agricultural production, potentially reducing support for rural development, conservation, and other non-production aspects that many farmers rely on for income diversification and risk management
  • These changes would likely accelerate the depletion of working capital and financial distress, particularly impacting smaller and diversified operations that have built business models incorporating these initiatives
  • The upcoming 2025 Farm Bill negotiations represent a critical turning point for American agriculture, as current provisions have proven insufficient in protecting farmers from market volatility and environmental challenges
  • While there's growing momentum in Congress for enhanced agricultural support, it faces resistance from broader initiatives to reduce government spending

Looking ahead, the agricultural sector faces even more significant structural changes under proposed policies outlined in Project 2025. This blueprint advocates for narrowing USDA's role, separating agricultural provisions from nutritional provisions in the Farm Bill, moving the Food and Nutrition Service to HHS, and implementing more restrictive eligibility requirements for nutrition programs.

These proposed changes would fundamentally alter the traditional coalition that has supported comprehensive farm policy since the 1970s. By dismantling the historical alliance between agricultural and nutrition interests, Project 2025 could make it more difficult to secure support for farm programs in the future, potentially leading to further reductions in agricultural assistance.

The document's focus on limiting USDA's role to primarily agricultural production could reduce support for rural development, conservation, and other non-production aspects of agricultural policy that many farmers have come to rely on for income diversification and risk management. This narrowed focus would come at a time when farmers need more—not fewer—tools to navigate financial challenges.

If implemented, these policy changes would likely accelerate the current trends of working capital depletion and financial distress across agricultural operations. The proposed shift away from conservation and rural development programs would particularly impact smaller and more diversified operations that have developed business models incorporating these initiatives.

The 2025 Farm Bill negotiations, approaching in this context of financial crisis and policy upheaval, represent a crucial inflection point for American agriculture. Many agricultural stakeholders argue that the current farm bill's provisions have proven insufficient in protecting farmers from market volatility and environmental challenges. The push for enhanced agricultural support has gained momentum in Congress, but faces headwinds from broader initiatives to reduce government spending.

Widespread Impact of Agricultural Collapse

The potential widespread failure of American farms would have devastating consequences far beyond agriculture:

  • Rural communities would experience broad economic decline as farm failures reduce local spending, tax revenues, and jobs
  • Agricultural dollars have a significant multiplier effect throughout the economy, supporting equipment manufacturing, input suppliers, processing facilities, and service providers
  • Land values could face severe downward pressure if financial distress forces widespread farm liquidations, potentially triggering a destructive feedback loop similar to the 1980s farm crisis when land values fell by 60% in some regions
  • Food security would be compromised even with global production offsets, as we would face supply chain disruptions, increased import dependency, and greater price volatility (as demonstrated during the COVID-19 pandemic)
  • Environmental consequences would include soil erosion, invasive species proliferation, and water quality issues from abandoned or poorly managed agricultural land
  • National security would be undermined as agricultural capacity represents a strategic asset that, once lost, cannot be quickly regenerated, especially as climate change and geopolitical tensions increase the likelihood of global food production disruptions

The cascading effects of widespread agricultural financial failure would extend far beyond farm communities. Agriculture remains a foundational sector of the American economy, with impacts that reverberate through food processing, transportation, retail, and export markets.

In rural communities, the potential collapse of agricultural operations would trigger broader economic decline. Farm failures directly reduce local spending, tax revenues, and employment opportunities. The multiplier effect of agricultural income is well-documented—each dollar generated in agriculture creates additional economic activity in supporting sectors including equipment manufacturing, input suppliers, processing facilities, and service providers.

Land values, which have remained relatively stable despite declining farm profitability, could experience significant downward pressure if financial distress forces widespread liquidations. Since agricultural land serves as collateral for much of the sector's debt, declining land values could trigger a feedback loop of financial instability reminiscent of the 1980s farm crisis, when land values fell by 60% in some regions and triggered a wave of farm bankruptcies and bank failures.

Food security implications also loom large. While global food production could technically offset domestic production declines, the transition would not be seamless. Supply chain disruptions, increased import dependency, and greater price volatility —due, in part, to the tariff programs by this administration — would likely characterize a shift toward greater reliance on foreign agricultural production. The COVID-19 pandemic demonstrated the fragility of international supply chains, particularly for essential goods like food.

The environmental consequences of agricultural collapse would further complicate recovery efforts. Abandoned or poorly managed agricultural land can lead to soil erosion, invasive species proliferation, and water quality issues. The elimination of conservation programs exacerbates these risks by removing incentives and technical support for sustainable land management practices.

National security considerations also come into play. Food production capacity represents a strategic asset that, once lost, cannot be quickly regenerated. The agricultural knowledge base, infrastructure, and soil health built over generations can erode rapidly without continuous stewardship. As global climate change and geopolitical tensions increase the likelihood of food production disruptions worldwide, maintaining domestic agricultural capacity becomes increasingly important as a buffer against international instability.

Conclusion: The Path Forward

The current agricultural crisis demands immediate intervention to prevent widespread collapse:

  • American agriculture faces unprecedented threats from the combination of financial fragility, program eliminations, and proposed policy changes
  • Unlike other industries, agriculture cannot be quickly restarted once operations fail - the seasonal nature, biological constraints, and capital-intensive infrastructure mean rebuilding could take years or decades
  • The 2025 Farm Bill represents a critical opportunity to strengthen agricultural safety nets and provide farmers with tools to weather economic downturns
  • Farmers must focus on three immediate priorities: preserving working capital, implementing rigorous financial monitoring, and exploring innovative approaches to maintain viability
  • Without coordinated action from producers, policymakers, and agricultural stakeholders, we risk a transformation that reduces domestic production capacity, increases food system vulnerability, and fundamentally alters rural communities
  • The consequences would extend far beyond farms, affecting national prosperity and security for generations to come through economic decline, reduced food security, and strategic vulnerability

The convergence of financial fragility, program eliminations, proposed agriculture policy changes creates, and crushing tariff and border policies represent an unprecedented threat to American agriculture. Without intervention, we face the prospect of accelerated farm failures, widening regional and sectoral disparities in agricultural financial health, and potential destabilization of food supply chains.

Addressing this crisis requires recognition of agriculture's unique position in the economy and society. Unlike many industries, agricultural production cannot simply be turned on and off in response to market signals. The seasonal nature of production, biological constraints, and capital-intensive infrastructure create significant barriers to entry and exit. Once agricultural operations fail and infrastructure is dismantled, rebuilding capacity requires years, if not decades.

The 2025 Farm Bill represents a critical opportunity to strengthen agricultural safety nets and provide farmers with the tools needed to weather economic downturns. Effective policy responses would address both immediate liquidity challenges and long-term structural issues facing the sector.

Individual producers must simultaneously focus on preserving working capital, implementing rigorous financial monitoring, and exploring innovative approaches to maintain viability. Agricultural lenders have emphasized the importance of protecting cash flow and conducting more frequent assessments of financial positions in the current environment.

The resilience of American agriculture has been tested many times throughout history, but the current crisis—characterized by the combination of depleting working capital, program eliminations, and potential structural policy changes—presents unique challenges. Navigating this period successfully will require coordinated efforts from producers, policymakers, and agricultural stakeholders to preserve the foundation of American food security and rural prosperity.

Without such efforts, we risk witnessing a transformation of American agriculture that dramatically reduces domestic production capacity, increases food system vulnerability, and fundamentally alters the character of rural communities across the nation. The economic, social, and strategic implications of such a transformation would extend far beyond the farm gate, affecting national prosperity and security for generations to come.

You can help by following the guidance outlined by the Food Research & Action Center: