Farm Production Costs Surge Toward Record Highs

Jun 23, 2026
By Farms.com

USDA projects rising farm input costs through 2027 despite easing fuel

The USDA’s latest Commodity Cost and Returns report highlights growing financial pressure on farmers across the United States. Updated projections show that production costs for every major crop will rise in 2026, mainly due to higher fuel and fertilizer expenses.

Global disruptions in energy and fertilizer markets, including concerns around shipping through the Strait of Hormuz, have increased input costs and tightened farm margins. A recent survey by the American Farm Bureau Federation found that nearly 70% of farmers could not afford all the fertilizer they needed for the 2026 crop year.

Compared to earlier estimates, production costs for 2026 were revised higher for all crops. Rice saw the largest increase, followed by peanuts and corn. The main driver behind these increases is a sharp rise in fuel, electricity, and fertilizer expenses. Fuel costs alone increased by over 30% for many crops.

Looking ahead, the outlook for 2027 shows little relief. Total production costs are expected to reach record highs for most major crops. Rice may cost about $1,427 per acre, while peanuts, cotton, and corn are also projected to see high per-acre expenses.

Although fuel and fertilizer prices may decline as global supply conditions improve, other expenses are expected to rise. Higher costs for seed, chemicals, labor, machinery, repairs, and cash rent will continue to push production expenses upward.

Over the long term, farm production costs have steadily increased. Since 2005, expenses for crops like soybeans, corn, wheat, and rice have more than doubled. This trend makes farmers more vulnerable when crop prices fall.

Overall, the USDA report shows that high input costs are not temporary. Even with some relief in energy prices, farms will continue to face tight margins. Policy support and stronger safety programs may be needed to help farmers manage these challenges in the years ahead.

Photo Credit: istock-cactusoup

Video: The 15-Year Bet Behind Every New Variety!

Canada is trying to decide how much agricultural research capacity it can afford to lose. Brian Rossnagel believes the better question is whether the country can afford to rebuild it.

The longtime barley and oat breeder makes the case with a simple fact about his profession: the consequences of today’s decisions may not become visible for 10 or 15 years.

“Pick the right parents. That’s the biggest thing,” Rossnagel says. “If you pick the wrong parents, you’re not going to get anywhere—and you don’t know that until 10 years, 15 years later.”

That warning carries particular weight as Agriculture and Agri-Food Canada moves to reduce spending and streamline parts of its science operations. The department’s 2026–27 plan anticipates the loss of approximately 665 positions by 2028–29 and says some research will be reduced where capacity exists in academia or industry. AAFC says the changes will make its science operations more cost-effective over the long term.

For Canada’s seed industry, Rossnagel’s career illustrates what is at stake.

This fall, the retired University of Saskatchewan breeder will be inducted into the Canadian Agricultural Hall of Fame. During his 35-year career at the Crop Development Centre, he helped develop more than 100 barley and oat varieties, including CDC Austenson—one of Western Canada’s most widely grown feed barleys. His induction recognizes not only those varieties, but the collaboration and research system that made them possible.

Rossnagel is quick to emphasize that none of it was the work of one person.

“The first thing I thought about was all the other people who contributed to whatever success I and my program had over the years,” he says. “We know that it’s not an individual who does this. It’s a group—a team.”

That team extends well beyond the breeder whose name appears beside a variety. It includes technicians, pathologists, quality specialists, statisticians, regional testing sites, seed growers and industry partners. It also includes the breeders who came before and those who will carry the germplasm forward.

CDC Fraser barley, for example, moved through three breeding careers. Its parents came from Brian Harvey’s program. Rossnagel advanced the material after Harvey retired, and Aaron Beattie later guided it through registration and release.

That kind of handoff is normal in plant breeding. The person who makes the original cross may never see the resulting variety reach farmers.

It also explains why lost research capacity cannot simply be switched back on when budgets improve.

“If you shut it off, it’s very, very difficult—and particularly costly—to start it up again,” Rossnagel says. “If you have to start from scratch, it’s going to be at least 10 years before anybody notices whether you’re getting anything done or not.”

The concern is not simply how many experimental lines Canada can process. Modern equipment, statistical tools and genetic technologies allow today’s breeding programs to evaluate tens of thousands of lines—far more than Rossnagel could handle when he entered the field in the early 1970s.

But efficiency and automation do not generate every idea.

“If you pare back down, and instead of having six or seven individual scientists concentrating on wheat breeding, you go down and say three people could handle all this, well, that’s half the ideas gone,” he says. “Particularly if you happen to lose the three people who had the really neat and innovative ideas, boy, that’s a problem.”

It is a timely distinction for Canadian agriculture. Consolidating programs may preserve the volume of material moving through a system, at least initially. It may not preserve the diversity of thinking, regional knowledge or willingness to pursue unconventional crosses.

That regional knowledge matters because Canadian agriculture is not one uniform production environment. A variety suited to southern Alberta may face different disease, moisture and maturity pressures than one grown in Manitoba, Ontario or Atlantic Canada.

“Agriculture is applied biology,” Rossnagel says. “Biology, all around the Earth, moves from the poles to the equator. It does not move from Newfoundland to B.C. like politics do.”