By Kiersten Sinn, Managing Director, Mortgage, Growers Edge
This fall, our team sat down with farmers in North Carolina, South Carolina and Wisconsin and asked them two questions: What’s on your mind right now? And what’s worrying you most?
They didn’t hold back. The farms we visited are hundreds of miles apart and run different operations, but their answers were nearly identical. Here’s what we heard, and what’s behind it.
1. “Fuel prices are killing us”
What we heard
That was the line we heard most. Diesel is a major driver of the farm economy, and it hits the checkbook directly, from getting inputs to the farm gate to moving product back out.
Road diesel is now above $6 a gallon in North Carolina and around $7 in Wisconsin. Some dairies locked in fuel prices for this year, which softened the blow.
But many of those contracts expire over the next several weeks. When they do, those farms will be paying today’s prices like everyone else.
What’s going on
The numbers back up what farmers are feeling. According to the U.S. Energy Information Administration, the national average for on-highway diesel was $6.28 a gallon as of Oct. 19, about $2.66 more than a year ago. Prices were climbing again after a brief dip in early October.
Farm diesel, which is exempt from the federal highway tax, averaged $5.45 in early September, up about 80% from $3.02 a year earlier.
The spike hit right at harvest, one of the most fuel-hungry stretches of the year. USDA now projects 2026 farm fuel and oil expenses will rise 28.8% from 2025, with total farm production expenses reaching $492.8 billion.
Why it matters
Nitrogen fertilizer is made with natural gas, and all fertilizer moves by truck, rail and barge. That means today’s energy costs are already built into next spring’s fertilizer, even if diesel falls this winter. In early October, anhydrous was up 20% from a year ago and urea was up 12%, according to DTN.
That leaves farmers with a tough call: buy fertilizer now at elevated prices, or wait and risk paying more. There’s no perfect answer, but knowing your break-even and how much more your operation can afford to pay will make the decision clearer.
2. Dairy: too much butterfat, not enough pay
What we heard
For dairy producers, the worry is butterfat. There’s more fat in the market than buyers need, and farmers aren’t being paid for it.
There’s little an individual farm can do. Butterfat levels are largely set by genetics, so they can’t be dialed back quickly. The only fix is stronger demand.
What’s keeping most dairies afloat is beef. An industry consultant we spoke with recently visited a 1,500-cow dairy that is bringing in almost $6/cwt this year from beef calves and cull cows.
That farm’s net income is $2.38/cwt. Cut the calf and cull cow income in half, and it would be losing money.
What’s going on
The U.S. dairy herd now stands at 9.71 million cows, the largest since 1992, while domestic demand is soft. With more milk than the market needs, product prices have slumped.
CME butter closed at $1.31/lb on Oct. 14, well below the $1.85 analysts had forecast for the second half of the year, and USDA’s advance butterfat price for October was $1.50/lb.
Beef has been the bright spot, but it’s starting to cool. Beef-on-dairy calves that brought $1,700 to $1,900 earlier this year are now selling closer to $1,300.
Cull cow prices in the Southern Plains, a key benchmark, have fallen about 18%, from a spring peak of $187/cwt to about $154 by late September. More dairy and beef cows are heading to market.
Why it matters
Beef-on-dairy income has carried many dairies through low milk prices, but it won’t stay at record levels forever. Dairies that budget around normal beef prices now will be better prepared if milk prices stay low.
3. Rising input costs and finding a financing partner
What we heard
Input costs keep climbing, and many farmers will need more operating financing to cover them in 2027. But finding the right long-term partner is getting harder.
Farmers told us they struggle to find a reliable operating financing partner as lenders consolidate and local community banks pull back.
What’s going on
The war in the Persian Gulf drove input costs sharply higher this year, while crop prices stayed low. That squeeze is showing up in farm income: USDA projects net farm income will slip 2.6% in 2026, or 5.5% after inflation.
Next year doesn’t look cheaper. USDA’s early projections put 2027 production costs at record highs for major crops, including about $952 an acre for corn.
As costs rise, so does the need for operating capital. The St. Louis Fed reports that farm production loans, which include operating lines, grew 6.1% over the past year at community banks, driven by higher input costs.
Why it matters
Most 2027 decisions need to be made this fall. Know your numbers and line up financing now, so you can lock in inputs and capture prepay discounts.
Wait until spring, and you’ll be making those same decisions with fewer options and higher prices.
Planning for 2027
No two operations feel these pressures the same way, so we start with your numbers and your plans for next year. Here’s what Growers Edge offers:
- Input financing: Finance seed, fertilizer and other inputs right at your local ag retailer.
- Operating financing: Cover inputs, fuel and day-to-day expenses through the season.
- Equipment financing: Upgrade or replace machinery on terms that fit your cash flow.
- Mortgage financing: Purchase farmland, refinance for better terms or lower payments, or take cash out for improvements.
Ready to talk about 2027? I’d like to hear your story. Reach out to me directly at kiersten.sinn@growersedge.com, and let’s start the conversation.