The theme that consumed the crops side of agriculture in 2024 was this: tighter margins with producers from coast to coast searching for ways to cut back
“It’s no secret 2024 was a tough year across the U.S., and California was no different,” says Clayton Houchin, CEO of the Buttonwillow Warehouse Company, which is located in Bakersfield, Calif. “A lot of the crops we produce were under significant price constraints while costs were going up. It was tough, tough recipe for a lot of farmers.”
That tough recipe also impacted farmers in the Upper Midwest — and it could be a similar story for 2025.
“Growers realize the margins are very tight on corn and soybeans and also wheat. They are looking for places to intelligently cut,” says Steve Hoffman, an independent crop consultant with InDepth Agronomy in eastern Wisconsin.
The First Place to Cut: Machinery
AgWeb recently polled farmers, asking what cost-cutting measures they plan to implement on their farm this year.
Out of the more than 1,300 farmers who responded to the online poll, the most glaring answer was machinery. Nearly 80 percent of farmers say that’s an area they’re likely to cut.
“Equipment is on the forefront everyone’s mind right now,” says Casey Seymour, general manager of Machinery Pete.
Purchasing machinery was also a place farmers decided to scale back on in 2024. The latest Association of Equipment Manufacturers (AEM) flash report shows sales of total farm tractors were down 13 percent on the year, and combines fell 24 percent.
Seymour says instead of a farmer buying a new piece planter or tractor, more are choosing to just retrofit what they have.
“I’m an upgrade kit guy. I think that’s the future of farming as you look at what’s going on,” says Seymour. “To me, it’s one of those things where you can take it and make new what you’ve got for a significant less amount of money than what you would have had if you went out and bought the brand new sprayer, planter or whatever. You can kind of take what you’ve got and make it new again.”
Slow Technology Upgrades
According to the latest AgWeb poll, 60 percent of farmers also say slowing technology upgrades is likely 9 percent said that decision is unlikely.
“I think if you look at the last five years of how much technology has been put out into the marketplace pre-covid, all the way through Covid and where we’re at now, the amount of technology that got produced during that time frame was epic,” says Seymour. “It was probably the highest amount of technology that got produced and put to the marketplace, across the board, in my 20-year career in the equipment business.”
Seymour says more farmers are working to home in on what they have when it comes to technology on their farm.
“Technology is one of those things where a lot of guys are still trying to get their arms around what they’ve got,” he says. “And I think so they’re looking at it going like, ‘I don’t really need to add a new gadget this year. Let’s get was kind of figure out what we’ve got right now. Let’s utilize those efficiencies. Let’s get through 2025, and let’s take a look at 2026 and see what we’re going to do equipment wise and technology wise.’”
Opt to Use More Generic Products
While equipment seems to be an area in focus, the AgWeb poll found more farmers are adjusting their agronomic decisions based on how margins look today, with 61 percent saying they’re likely to use generic products.
“There are expensive programs and there are programs that either through generics or maybe chemistries that are been on the market a few years that may do just as good a job as some of the premium new programs,” says Hoffman. “That’s definitely a place where growers can still get good weed control by smart shopping, looking at alternative herbicide programs.”
But Hoffman cautions in making the switch blindly, as he says not all generics are created equal.
“That’s a very confusing market. You really have to drill down to know what that active ingredient name is and what the percentage of active is,” says Hoffman.
Direction of Herbicide Prices in 2025
Prices of key herbicide prices like glyphosate plummeted last year. And it’s left farmers trying to navigate where prices go from here.
“We’re coming off a kind of a funky part of the cycle, obviously, where we had an excess of supply globally coming into the market. Distributors cut back on their sales. It caused a huge amount of impact on the earnings, but there was no kind of issues with production coming out of China, which is really that hub for a lot of these active ingredients,” says Samuel Taylor, who’s executive director of research into the farm inputs in the North American market for Rabobank.
Taylor says as costs were coming down, growers were canceling orders. All of those pressures caused the prices of active ingredients, which are used in key herbicide products, to fall.
“This year, I think that farmers should see a fairly benevolent market for a lot of these active ingredients,” says Taylor.
Reduce Fertilizer Rates
Herbicides may not be an area where farmers cut back on the amount of product they use, butt the AgWeb poll found 40 percent of farmers to plan o reducing fertilizer rates.
“And i think one of the first places that as we talk to growers, we talk about phosphorus and potassium, maybe some of those rates can be cut back,” says Hoffman.
Read More: Get the Most Bang for Your Fertilizer Buck
While farmers can cut back in some fields, Hoffman cautions farmers against cutting back across the board.
“Look at those soil tests, find those fields that are maybe in the non responsive range and cut back or don’t put fertilizer on some of those fields,” says Hoffman. “Another option for fertilizer would be to look at the banded application of banding that fertilizer closer to the planter is going to be more effective than a broadcast. And that’s going to allow you to to cut back the rates.”
Where Will Fertilizer Prices Go Before Spring?
As farmers look to cut back, what’s the outlook for fertilizer prices? Taylor says potash prices are starting to creep up.
“Potash generally seems quite plentiful, but there’s probably a little bit of incremental upside on that. And i think you compare this a little bit towards the phosphates, which have been structurally high for a good period of time,” says Taylor. There is a little bit of positive sentiment for growers about a greater availability in the North American market.”
But Taylor says the reality is supplies on a global market are still tight… and countervailing duties have prevented some supplies from making it to the U.S.
But one fertilizer that could see more supply this year, is nitrogen.
“If there’s any downside pricing pressure, it’s probably more likely on the ammonia over the coming six months where you could see some wholesale correction in price in excess of $100 per ton over the next six months probably,” says Taylor. “That’s probably the most dynamic on the downside to offer some reprieve to farmers. Potash prices could pick up a little bit, but they’re probably largely range bound and there’s still too much stickiness in the phosphate market really to see too much dynamic of thing.”
Advice for the Months Ahead
While Taylor thinks nitrogen could see some relief, he reminds farmers that one slight change on the global market, can inject chaos into the entire inputs market.
“Where you see an ability to lock in profit and take risk off the table, you should take a decent amount of that because everything that I have just said could be blown out of the water with the stroke of a pen or a geopolitical event,” says Taylor. “And I think that understanding the complexities of the supply chain means that farmers need to manage to rely and look to take out the risk where they have a possibility of doing that.”
As farmers look at critical decisions for 2025, Hoffman says it’s so important for farmers to get back to the basics.
“Number one, do a crop budget. Look at all those input costs and look at reasonable selling prices for those commodities. And then all those extra things that we’ve added to the tank when we had $5 plus corn, ask yourself real, real hard, if you’re sure we’re getting a good economic return to those types of products? And if you are put in the tank, but if you’re not, this is the year to maybe just stick with the basics and leave those things out.”
