According to a new report from Field to Market, the prolonged period of low commodity prices in recent years has created significant financial pressures for U.S. agriculture, jeopardizing many farming operations and challenging the ability of supply chains to meet ambitious sustainability goals absent more direct support for growers. The findings underscore the critical relationship between farm financial well-being and a producer’s ability to make operational changes needed to deliver improved environmental outcomes.
- Financial well-being of U.S. farms has decreased steadily since 2013, largely due to weaker commodity prices. These conditions have been exacerbated in the past two years by trade disputes, more frequent extreme weather events and the COVID-19 pandemic, which upended traditional supply chains leaving many farmers without a market.
- While overall financial health has not reached crisis levels like that of the 1980s, downward trends are a sign for caution, particularly given the extent to which the federal government has supported farm receipts in recent years with programs that are not guaranteed to continue.
- The current financial situation will have a significant influence on the types of sustainability practices farms will undertake. Any management decisions that have immediate positive profit implications are likely to have priority. On the other hand, practices that reduce immediate profitability are less likely to be adopted, particularly if those practices negatively impact yields or come with investment expense.
- Now more than ever, the value chain should consider creative mechanisms that support farmers in transitioning to practices that will deliver more sustainable outcomes.