5 Forces Reshaping the Ag Economy

by Lisa Foust Prater (Successful Farming) CoBank’s Jacqui Fatka shared challenges and reasons to be hopeful at the Women in Agribusiness Summit. --

Margins are tight and farm income is down, but the ag economy is cyclical, and there are reasons to be hopeful. That was the message Jacqui Fatka, CoBank’s lead economist for farm supply and biofuels, shared with more than 700 attendees at the 15th annual Women in Agribusiness Summit in New Orleans today.

1. Compressed Margins

She expressed concern over increased government payments, which could total one-third of net farm income in 2026, asking, “Is this sustainable? Is this addressing the overall needs of the ag economy?”

Recent improvements in crop prices are providing some relief, but due to the high cost of inputs such as fertilizer and fuel, “we’re still not at breakeven levels for most of our crops,” she said. “A lot of people are asking, ‘Is this what we saw in the farm crisis in the 1980s?’”

There is reason to be hopeful, Fatka said. Tight supplies and a potential shortage in the corn crop could create opportunities for farmers who know their numbers. “You can execute your marketing plan much more effectively when you know your cost of production,” she said.

2. Asset Values

According to USDA, land values have risen 46% since 2018. “When farmers go to the bank to get their operating loans, that farmland is very important collateral,” Fatka said.

3. Protein Demand

Despite rising beef prices, consumers aren’t pushing back, Fatka said, due in large part to GLP-1 weight loss medications.

4. Demographic Shifts

Many countries in Europe and Asia expected to experience population declines in the coming years, Fatka said, which means decreased demand for U.S. food exports.

She said that adjustment must include Canada and Mexico. “I can’t overstate how important these two markets are to us,” she said. Latin America, Africa, India, and Southeast Asia also show potential for growth.

5. Hope For Biofuels

“Biofuels remain one of the shining lights in agriculture, but we also have some things we need to address to continue building opportunities,” Fatka said.

“If you look back to 2005 and 2007, the Renewable Fuel Standard (RFS) brought an overnight demand for corn and ethanol … a great boom happened in rural America,” she said. “Corn prices were $2 at that point, then went to $4, and $8 during short years. But now we’ve been back in the $4 range for quite a while, and today’s $4 corn is like the old $2 corn. We need some new opportunities.”

Fatka those opportunities include sustainable aviation fuel (SAF), ethanol use in the maritime industry, ethanol exports, and the possibility of nationwide E15.

“Because of the Iran war, there are a lot of countries seeing the good economics of blending biofuels and diversifying their fuel supply,” she said. “We could see demand surge by 30% this year and 70% by 2030.”

“I think there’s a lot of promise with SAF. I just don’t think it’s going to happen in the next two or three years,” she said. “There’s a lot that needs to still happen to make that work.”

While Fatka said she isn’t very bullish on SAF, she is more optimistic about maritime uses. In 2024, the U.S. produced 16 billion gallons of maritime fuel and exported 2 billion. “If ethanol could capture just 5% of that, we could see an extra 4-5 billion gallons of new demand,” she said. READ MORE