“Yeah, you can buy dirt...
And thank the good Lord for it...
‘Cause he ain’t makin’ any more of it.”
The lyrics above are from the 2021 hit country song “Buy Dirt,” which voices a mantra that lives within every farmer, because those who farm view land as more than a commodity; it’s their livelihood and legacy.
Those generational legacies are at the greatest risk of extinction since the 1980s farm crisis. Persistently high interest rates are a key reason.
We’re in an agricultural downturn that owes its roots to many reasons: low commodity prices, high input prices, tariffs, trade disputes, etc. Interest rates happen to be one of many reasons contributing to this latest economic funk.
However, if a 1980s-type agricultural land crisis emerges from this downturn, many will point to the Federal Reserve as their favorite scapegoat. That’s because in its zeal to combat inflation at all costs, the Fed might have just cost many the chance to grow the farm, and in some cases even keep the farm.
The Math That Doesn’t Lie
An Iowa corn farmer pencils out a purchase on quality farmland priced at $11,467 per acre (2024 Iowa State University Land Value Survey). With current financing at 7.6% interest (Federal Reserve agricultural lending rates), the annual debt service alone costs $777 per acre on a 30-year loan with 20% down.
The same acre generates roughly $814 in gross revenue from corn at USDA’s projected 2025/26 price ($3.90 per bushel at 209 bu. per acre average Iowa yield, USDA World Agricultural Supply and Demand Estimates, August 2025). Here’s the devastating math: total production costs, excluding land costs, reach $595 per acre (Iowa State University 2025 crop production cost estimates).
Renting identical land for $271 per acre results in a $52 annual loss per acre. Land ownership amplifies this to a $558 annual loss per acre, a financial wall that makes farmland purchase economically destructive.
To break even on rental operations, corn prices would need to reach $4.14 per bushel — 6% above USDA’s projection. For land ownership to pencil out, corn would need to hit $6.56 per bushel — 68% above the projected price.
Disproportionate Burden
While rising interest rates have impacted the broader economy, no sector has been hit harder than agriculture, particularly farmers attempting to build equity through land ownership. American agricultural producers paid $33.85 billion in total interest in 2023 (USDA Economic Research Service), representing 7.4% of total expenses and making interest the third-largest farm expense category.
The comparison to housing reveals ag’s unique vulnerability. Both sectors experienced similar interest rate increases — from roughly 3% up to 6% to 8% — but with different outcomes. In housing, higher mortgage payments remain manageable for qualified buyers. In agriculture, land purchases now generate negative cash flows that make ownership financially impossible for most operators.
Why the stark difference? Agricultural land purchases are purely investment-driven, requiring positive returns to justify the expense. Unlike housing, which provides utility regardless of financial performance, farmland must cash flow or it becomes economically irrational to own.
Numbers Tell a Bleak Story
Over the past five years, interest expenses have become the fastest-growing farm expense, increasing 19.1% in 2023 and 33.2% in 2022 (USDA Economic Research Service). For the first time since 2001, interest costs on new farmland loans have surpassed the recent average annual appreciation in land values, a fundamental shift in farmland economics.
With corn supplies projected at a record 16.7 billion bushels and continued oversupply expected, the commodity price recovery needed remains years away. Total farm sector debt is forecast to reach $561.8 billion in 2025 (USDA ERS, February 2025), yet the income to service this debt continues shrinking. USDA’s brutal assessment: Ag economists report that 56% think U.S. agriculture is in recession (Farm Journal’s Ag Economists’ Monthly Monitor).
This economic reality is triggering a fundamental shift in American agriculture’s structure. Land ownership is rapidly giving way to rental arrangements. While specific projections for rental acre increases vary, the trend is clear: The rental market will start expanding significantly.
Though Iowa cash rental rates decreased 2.9% in 2025 to $271 per acre, the first decline since 2019 (Iowa State University), many
farming operations struggle to generate profits. Many analysts suggest this dip is temporary, as rental rates and land prices will have to find some equilibrium.
A New Investment Priority
Amid this crisis, one investment category offers opportunity: production efficiency technology. Well-implemented efficiency investments can deliver 15% to 30% profitability improvements with manageable risk and measurable benefits. Producers must adopt these ROI technologies soon to distinguish themselves as best-of-breed operators.
The same cash or equity down payment used for land purchase could drive efficiencies across all acres currently owned and rented. Critical areas include precision fertilizer systems, GPS guidance systems, variable rate technology and comprehensive precision agriculture systems that can achieve up to double-digit ROI on large-scale operations in optimal conditions.
Maximizing efficiency gains can mean survival in the downturn, but they cannot overcome the economics of $11,467-per-acre land with USDA’s projected $3.90 corn.
What Comes Next
The path forward requires recognizing this as a structural transformation. Land prices need 30% to 40% declines, corn prices need recovery above $5.50 per bushel, or interest rates need to drop to 4% to 5% to restore purchase viability. None appear imminent.
Over 50% of U.S. cropland is rented (2022 Census of Agriculture); that is expected to grow. Only the strongest operators will remain as landowners, while others transition to tenant farming with reduced equity-building opportunities.
This turnover in land ownership will mainly occur via generational transfers — from farming families to heirs who may no longer be bound to the land’s legacy. These inheritance-driven transitions will fundamentally reshape rural America’s ownership patterns, often favoring rental arrangements over continued family farming operations.
For farmers, immediate priorities include maximizing operational efficiency through technology, securing flexible rental agreements and building cash reserves for the inevitable land price correction. The bigger question is: Can policymakers, lenders and farmers navigate this transition while maintaining productive capacity and preserving rural communities?
It’s time to get to work, as the math doesn’t lie, and this transformation has begun.
Author’s Note: As of this article’s writing, the Fed had not held its September meeting. In August, it indicated that a .025% rate cut might be forthcoming; rates would still be 2.5 percentage points higher (161%) than before the pandemic.
Steve Cubbage is a precision ag consultant and farmer from Nevada, Mo. He is the founder of Longitude 94, an agriculture sustainability and technology consulting business.
