Strategies to help farmers thrive amid rising costs and volatile markets

Today’s farm economy is marked by uncertainty. While volatility remains a challenge, one constant persists—rising crop and livestock input costs continue to strain farmers’ and ranchers’ bottom lines. 

Amid these pressures, there are signs of stability that could help offset high production costs. By understanding the current state of the agricultural sector, its future direction and the main drivers of change, you can identify opportunities for your clients while strengthening your role as a trusted advisor in this challenging industry. 

Optimism amidst consistent change and instability

Nationwide Chief Economist Kathy Bostjancic remains optimistic for the medium to long-term despite a volatile agricultural outlook with significant potential challenges both this year and in the future. According to Bostjancic, a few key macroeconomic indicators suggest a scenario of moderation in the near-term rather than crisis:

• Gross Domestic Product is moderating as we move through the second half of this year, but we look for economic activity to rebound next year on a shift to pro-growth economic policies and a reduction in trade uncertainty. Bostjancic said. 

• While likely ticking up slightly in the next six months, unemployment should remain relatively low. 

• Core services and goods prices have surprised to the low side, but we forecast a temporary rise in the coming months from increased tariffs. 

“Consumer spending is moderating with the overall economy in the remainder of 2025, but we look for a rebound next year as companies resume a more robust hiring pace and upper-income brackets are still experiencing significant wealth gains,” Bostjancic added. 

Lingering financial pressure on the farm

Farmers and ranchers will continue to face challenges through 2025. Economic growth is moderating and the cost of farm inputs remains high. Expenses like crop protection products, fertilizer and fuel are expected to keep putting pressure on profit margins. 

“This lag is creating a scenario where farmers are absorbing more risk for less potential return,” Bostjancic said.

Interest rates and financial pressure

Elevated interest rates continue to weigh heavily on farmers and ranchers. Rising borrowing costs have left many producers feeling financially stretched, particularly those managing operating loans or land debt. As a result, capital spending on items like new farm machinery and equipment is likely to remain subdued for the foreseeable future. 

“The overall weight of financial obligations brings a level of stress that simply can’t be ignored,” Bostjancic added. 

Practical strategies for navigating farm input cost pressure

Building resilience amidst this kind of uncertainty takes more than optimism. Here are a few steps you can recommend to clients to help manage through today’s volatile markets: 

1. Rethink input buying strategies

• Lock in prices early whenever possible. This is especially important for essentials like fertilizer and fuel. Doing so can help prevent buying when prices spike during peak demand. 

• Leverage group buying programs or ag cooperative memberships for bulk discounts and negotiation power. 

2. Consider new technology and tools

• Think about adding new farm management software that helps manage inputs and expenses. New artificial intelligence tools, for example, can help track everything from crop modeling to automated input tracking. 

• Use data-driven insights to fine-tune different operations. This includes fertility programs, irrigation schedules and livestock herd health plans. Doing so can help maximize value from each dollar spent. 

3. Build financial resilience

• Review and update operating lines of credit and be proactive about talking to lenders as interest rates shift. 

• Work closely with insurance providers to ensure your risk management strategies are fully updated and reflect your current operational realities. 

Offer your unique expertise

At Nationwide, we understand the importance of staying informed about the evolving challenges and opportunities within the agricultural industry. By combining your expertise and local knowledge with tailored strategies and proactive support, you can build trust and establish yourself as a key partner in driving long-term success for your clients.