Farm production expenses have climbed faster than the prices farmers receive for major program crops since the 2018 Farm Bill became law on December 20, 2018, according to reporting flagged by American Ag Network. The squeeze shows up most clearly in the gap between input categories that index to energy and global fertilizer markets and the commodity prices that Title I programs were designed to support.

What did the 2018 Farm Bill set as the commodity safety net?

The 2018 Farm Bill, formally the Agriculture Improvement Act of 2018, reauthorized Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) as the primary commodity safety net for covered crops including corn, soybeans, wheat, rice, peanuts, and seed cotton. The law preserved marketing assistance loans and introduced new provisions for dairy, hemp, and orchard crops. Reference prices set in the 2014 Farm Bill carried over with a modest adjustment for seed cotton.

Which costs have moved the most since 2019?

The cost side has moved considerably more than those reference prices. Fertilizer, fuel, and lime costs — the categories USDA tracks under "fertilizer, lime, and conditioners" — have been the most volatile line items since 2019. Nitrogen prices spiked in 2021 and 2022 as natural gas markets tightened in Europe and global ammonia supply chains adjusted to sanctions and trade disruption. Seed, chemical, machinery, and labor costs moved more gradually but in the same direction.

How have crop prices performed against those costs?

Crop prices that determine PLC and ARC payments — the marketing year average price farmers actually receive — have been more cyclical. Corn futures spent much of 2019 below $4 a bushel, rallied sharply in 2021 and the first half of 2022, then fell back toward $4 by late 2023. Soybeans followed a similar arc. Wheat and cotton showed comparable volatility. None of those moves lifted the long-term trend for crop receipts above the trend for production expenses, according to the headline finding flagged by American Ag Network.

What does the gap mean for farm margins?

Cash operating costs in major corn and soybean states tracked by USDA's Economic Research Service have remained elevated even when commodity prices have softened. Land costs — both cash rent and the implicit cost of owned land — have continued to climb, adding a fixed-cost layer that does not flex with the market. Labor and custom work have risen with broader wage trends. PLC payments have been small or zero in recent years because marketing year average prices sat above the reference thresholds for most covered crops.

What is the forward outlook?

If input costs continue to track above the rate of general inflation while crop prices revert toward longer-run averages, the gap between expense growth and revenue growth will keep widening. Operators with locked-in fertilizer and fuel contracts, owned land with low basis, and lower cash rents will outperform those buying inputs at spot and renegotiating rent annually. Congressional staff and farm group economists have framed the next farm bill debate around whether to update reference prices, expand base acres, or modify payment limits to reflect the changed cost structure. The 2018 law was extended for one year in November 2023, and a new five-year framework is expected to carry any reference-price adjustment.

The arithmetic American Ag Network flagged remains the operating reality for most row-crop producers heading into the next planting season: expenses up, crop prices sideways to down in real terms, and a safety net still calibrated to 2018 conditions.