Texas farmers and producers in 2025 experienced mixed results with some areas stronger and others showing a loss in major commodities due to lower prices, high input cost and increasing farm debt, only slightly relieved by some federal aid programs at the end of the year.
Record corn yields were seen, but couldn’ t overcome price drops, leading to tight margins, though overall net farm income was projected to rise due to livestock and government support. High input costs (fertilizer, fuel) and record farm debt levels, coupled with rising interest rates, squeezed farmers’ margins. Lower prices for corn, wheat, and soybeans reduced cash receipts, even with high production in some cases like record corn yields. Cotton acreage decreased, but receipts remained stable. Recent data from the U.S. Bureau of Labor and Statistics shows that inflation is slowing, but farmers and ranchers are still facing many other economic challenges affecting their bottom line.
That economic squeeze has been happening for several years, American Farm Bureau Federation (AFBF) Economist Bernt Nelson said. “So, if we look at USDA’s recent price indexes for crop producers, the index for our prices paid for supplies, repairs, inputs, things like that, has been higher than the index for prices received for our crops grown over the last five years, and the gap for these prices received and prices paid has grown particularly wider since 2023,” he said. Nelson noted farmers are also trying to balance lower commodity prices with rising interest rates and limited financial flexibility across multiple aspects of their business.
“For many, that means losses for three years in a row,” he said. “These losses have increased credit use in the industry, all while interest rates have climbed. This results in a rising amount of money being spent on interest that services debt, and it adds to the bleeding that’s already being felt for crop losses on our farmers’ balance sheets.”
The Federal Reserve’s board of governors will decide to either lower interest rates or leave them higher for a little longer during their September meeting, a decision closely watched by the agricultural sector.
“So, on one hand, they have a decision to leave rates where they are. This would keep inflation from increasing again, but it would also continue to dig deeper into our farmers’ pockets,” Nelson said. “On the other hand, if they would decrease interest rates, this would make credit less expensive, and this would kind of slow that interest-to-income ratio, but it could risk inflation flaring up again.
Other key impacts on farmers and operations included various financial assistance halted such as disaster relief payments for drought and floods, crop insurance and farm safety net programs getting stuck in a government shutdown, leaving farmers without crucial funds; FSA loan access frozen, blocking new loans or delaying existing ones; processing of conservation programs funds; data and reports unavailable from USDA due to government shutdown; and labor uncertainty and shutdown adding existing labor woes (like H2A visa issuance).
The broader impact, particularly with a lack of functioning government creates supply chain risks potentially leading to higher prices and less availability; increased farmer debt and operational costs (higher interest rates, tariffs) can lead to farm foreclosures, hitting rural economies hard; and uncertainty in making long-term planning for crops, investments, and sustainability difficult.