Will Today’s Lower Grain Prices Impair Your Grain Operation?

Over the last five years, grain farming has been very profitable. Higher grain prices led to higher profits, resulting in producers reinvesting heavily in their operations. This has caused the fixed costs of farms to increase significantly.

We've witnessed two common outcomes of this reinvestment. First, higher debt levels are taken on by farm managers. The new debt results from the purchase of new assets such as land, buildings, and equipment that are financed instead of bought for cash. Financial Institutions have been eager to lend money into the profitable grain sector. Lastly, producers face higher land rental costs as the demand for productive land increases in times of high prices.