If a loan renewal is going to go badly it usually goes badly for similar reasons: the farmer and lender were looking at the number for the first time together.
That’s the part worth talking about right now, because most of the advice going around about a thin year is about size. Cut more. Cut deeper. Almost nobody tells you what order to cut in, and the order is where the money actually is.
The 2026 Farm Economy, in Per-Acre Terms
American Farm Bureau’s July analysis projects that 2027 would mark a sixth year of negative returns over total costs for most major row crops. Corn losses widen from about $131 an acre this year to $167 next year. Soybeans go from $80 to $138.
Read their footnote, though. Farm Bureau says plainly that those are projected losses rather than realized ones, and that producers “still have time to adjust acreage and input decisions.” The organization publishing the scary number is telling you the number isn’t settled yet. That’s a planning window, and it’s open right now.
The University of Illinois budgets show the same squeeze at ground level. On high-productivity cash-rented farmland in central Illinois, a 50-50 corn and soybean rotation projects a return of $11 an acre for 2026, against a long-run average closer to $100. And $25 of that $11 is an ARC/PLC payment that doesn’t show up until October 2027.
So on a cash basis, that acre goes backward in 2026 and catches up 18 months later. The margin is real. The timing is the problem.
Working Capital Is the Number to Watch This Fall
USDA’s Economic Research Service forecasts farm sector working capital falling 9.2% in 2026. Working capital is just your current assets minus your current liabilities, and in a thin year it does exactly one job: it buys you time.
I’m not alone on that one. The ag lender AgAmerica expects tight margins to hold through the year and puts monitoring working capital at the top of its list of moves, for the same reason I would: watching that number move is what gives you room to adjust before you’re forced to.
Cash is the ability to wait for a better bid. It’s the ability to pass on a landlord’s ground without wondering how you’ll cover March. Every decision you make between now and January either lengthens or shortens how long you get to be patient. Run each one through that filter and most of them get easier to make.
What to Cut When Farm Margins Go Negative
Iron first. A machinery payment is fixed and your revenue isn’t, and trading up doesn’t lower your cost per acre. It moves money out of a repair line you control and into an obligation you can’t renegotiate in August.
Then cash rent on your worst ground. This is the hardest item on the list and I know it, because those acres usually came with a handshake and some history behind them. But a marginal acre in a negative-margin year loses money twice: once on its own line, and again by eating the working capital that was supposed to protect your good ground. Walk away from acres before you walk away from agronomy.
Non-revenue capital projects can wait. The shed, the bin you don’t need yet, the shop floor.
And watch what you’re calling a cut. The most common panic move I saw from the lending side happened on the sales side: farmers who quit marketing entirely and sat on everything, waiting for a rally that didn’t come. Holding grain reads like discipline on the surface, but it’s an unhedged bet with a storage bill attached to it.
What to Protect, Even When It Costs You Cash
Fertility on your best ground. Cutting fertility is borrowing against next year’s yield at an interest rate you can’t see and can’t negotiate. If you’re going to underfeed something, underfeed the acres you’re already thinking about walking away from.
Your crop insurance coverage level. Subsidized crop insurance is still the cheapest hedge you can buy, and it belongs at the center of your marketing plan. Dropping coverage to save premium in the exact season you’re least able to absorb a hit turns the whole purpose of buying it upside down.
Your standing with your lender and your landlords. Both of those are a form of credit whether or not there’s paper on them. Through every tight cycle I watched, the operators who came out the other side with more ground were the ones people wanted to keep doing business with.
Why the Ag Lending Conversation Should Happen in October, Not February
Have it before you need anything.
Kent Thiesse, a farm management analyst who writes about this, lays out the prep about as well as anyone: a real year-end balance sheet, an actual income and expense statement, a comparison of what you budgeted last year against what happened, and a forward cash flow for the coming year. The budget-to-actual is the piece most people skip, and it’s the piece a lender reads hardest, because it tells them whether your projections have historically meant anything.
From the other side of that desk, a credit decision is mostly a question about belief. Can I trust this number? Losses don’t sink deals nearly as often as surprises do. A borrower who walks in having already found the bad number themselves gets a restructuring conversation. A borrower whose lender finds it first gets a different meeting, and it usually happens in February, when nobody has room to move.
Thiesse frames your ag lender as an informal partner in the business, which is right. I’ve sat on both sides of that desk. Most lenders live in your community and would much rather help you build a plan than get handed one.
The Part That Doesn’t Go in the Cash Flow
A thin year is a math problem and a stress test on how you make decisions. Panic is expensive: it tends to cut the inputs that produce revenue and protect the assets that produce pride. Discipline does the opposite, and mostly it comes down to doing the work in September instead of February.
Farms have been through margin cycles before, and the sector balance sheet is in better shape than the income statement suggests. Land values are holding. Sector equity is still climbing. The operators who plan through a stretch like this tend to farm more acres on the other side of it, because they’re the ones still making decisions while everybody else is reacting.
So pull your numbers before harvest wraps. Build the cash flow you don’t want to build. Then call your lender in October.
We get into farm profitability and farm financial management every week on the Farm4Profit Podcast. If you’ve got a decision you’re chewing on this fall, send it to me. Odds are somebody else in the audience is sitting on the same one.