ANKENY, Iowa – Despite Iowa farmers experiencing stable income levels in 2026, the state’s agriculture industry is experiencing a significant downturn, which is expected to continue through 2027.

That’s according to the “2026 Iowa Agricultural Outlook: The Pressuring is Rising” joint report recently released by Iowa State University’s (ISU) Center for Agricultural and Rural Development, the Iowa Farm Bureau Federation and the Iowa Bankers Association.

The report cited tight row crop margins, persistently elevated input costs, trade uncertainty, and long-term market shifts testing the state’s farm working capital as contributing factors for the downturn.

While the authors of the report said the conditions are not as dire as those that led to the 1980s Farm Crisis, mounting pressure has affected farmers, rural communities, and even other sectors such as manufacturing.

“When agriculture sneezes, the Iowa economy catches a cold,” said Christopher Pudenz, Iowa Farm Bureau Federation economics and research manager, who moderated a session about the report during the organization’s July 17 economic summit in Ankeny. Chad Hart, an ISU agricultural economist, and John Crespi, director of ISU’s Center for Agricultural and Rural Development, also shared highlights from the report.

Pudenz said, “The basis for this is that Iowa net farm income fell 53 percent from 2022 to 2024, and it’s the third year in a row during which crop costs outpaced crop revenues. The questions that we asked with this report are: How did we get here, and what is the path forward?”

According to the report, since 2021, corn and soybean production costs have increased 37 percent and 36 percent, respectively, with the largest increases tied to machinery charges and seed, chemical and fertilizer expenses – and crop input costs are expected to remain high due to broader economic uncertainty and ongoing conflicts abroad.

“The clearest warning sign is a steady tightening across the farm economy, with impacts felt well beyond the farm gate,” Pudenz said. “Agriculture remains one of Iowa’s largest economic drivers, accounting for roughly one-fifth of the state’s annual GDP, so a prolonged downturn can quietly weaken the workforce, erode the tax base, and slow commerce across rural communities.”

The report cited data showing the share of Iowa’s financially vulnerable farms has risen from 7.7 percent in December 2022 to 19 percent in December 2025, although that share remains below the levels seen in the late 2010s.

Adam Gregg, Iowa Bankers Association president and CEO, said, “Despite multiple years of challenging economic conditions, Iowa farmers have shown remarkable resilience. Through it all, Iowa banks continue to be important financial partners to the farmers they serve, providing access to credit and flexible terms to navigate today’s ag economy.”

The report said direct government payments to producers last year exceeded $30 billion, roughly double the yearly average from 2022 to 2024: “Another thing that’s been helping in the land market has been that we see relatively little land changing hands over time,” Hart said. “Limited number of sales keeps prices high.”

The 2025 ISU Land Value Survey said 40 percent of respondents expect Iowa land values to decline over the next year, while 82 percent expect land values to increase over a five-year timeframe, reflecting both near-term pressure and longer-term confidence in Iowa farmland.

On the other hand, the report said the state’s cattle market has been the one bright spot in the state’s agriculture, with record estimated monthly cattle feedlot returns in 2025: “Iowa’s livestock sectors have been this silver lining to an ag economy that otherwise has been struggling because of low row crop prices,” Pudenz said.

While some farmers have seen positive returns on cattle, he said strong demand amid low herd numbers and rapidly rising replacement costs have limited those opportunities: “This positive run has helped offset losses for some farm families, but we’ve talked to several Iowa cattlemen with empty feedlots because of high replacement costs and uncertain market conditions.”

In 2024, Iowa ranked second among all states in total commodity export value at $13.7 billion, according to the report, with corn and soybeans remaining the state’s top crops. From the 2025 to 2050 outlook, the report added that U.S. net exports of corn are projected to fall slightly, while Brazilian net exports are expected to increase by nearly 20 million metric tons.

The report said after a net farm income peak in the early 2010s, agricultural returns hit a low point in 2016, with recovery being slow until “the post-COVID-19 economic boom sent farm incomes back up into record territory, peaking in 2022 at $182 billion.”

Hart said, “If you’re in agriculture long enough, you experience these, (such as) incredible returns, but they’re followed by typically lulls of struggles for a while. I’m going to argue it will balance out. It just may take a little bit longer than we care to.”

Brent Johnson, Iowa Farm Bureau Federation president, said Iowa agriculture depends on strong markets here at home and around the world, as well as access to global customers that support farm income, local jobs, and the broader rural economy.

“When agriculture is under pressure, the effects are felt across Iowa – from small businesses and rural communities to the state’s overall economic strength,” he said. “That is why this study is so important: it helps quantify what farm families are experiencing, and why Iowa’s agricultural economy matters to every Iowan.”