For many farmers and ranchers, 2026 feels like a year when the numbers simply do not work the way they used to. Input costs remain high, interest expenses are taking a larger bite out of operating budgets, commodity prices have weakened in important sectors, and uncertainty surrounding trade and markets makes planning another season increasingly difficult.
For FVC members operating small and mid-sized farms, these pressures can be especially challenging. Smaller operations generally have less working capital to absorb a bad year, fewer acres, or animals across which to spread fixed costs, and less bargaining power when purchasing inputs or selling products.
But difficult conditions do not mean farmers are powerless.
The newly released Surviving the Farm Economy Downturn: 2026 Update, developed by the Southern Extension Economics Committee and other agricultural experts with support from USDA’s National Institute of Food and Agriculture, provides an important message: American agriculture is experiencing significant financial pressure, but today’s conditions are not yet comparable to the farm crisis of the 1980s. That distinction matters. This is a time for action, not panic.
Understand the Squeeze
The current downturn is different from previous agricultural crises. Crop farms in particular are struggling with the combination of lower commodity prices and significantly higher production costs. Many producers are responding by cutting expenses, restructuring debt, and looking for additional income.
Interest rates add another layer. The report notes that producers are experiencing the highest real interest rates in approximately 20 years, although they remain considerably below the extraordinary rates experienced during the 1980s.
For a small or mid-sized operation, the lesson is straightforward: cash flow matters more than ever. Knowing whether the farm made money last year is not enough. Producers need to understand which enterprises are making money, which acres or animals are contributing to profitability, where costs are increasing and how much additional debt the operation can realistically service.
This is where military experience can serve farmer veterans particularly well. Difficult environments demand situational awareness. You assess the conditions, understand the resources available, identify vulnerabilities, and adjust the mission. Farm management during a downturn requires much the same discipline.
Know Your Cost of Production
One of the most dangerous responses to declining margins is simply trying to produce more. More acres, more livestock, or more production can increase revenue, but they can also magnify losses if every additional unit is being produced below its true cost.
The report recommends returning to fundamental farm management: analyzing production costs, scrutinizing expensive inputs, managing machinery and land strategically, and examining labor and management time. It even suggests that some producers may need to reconsider their own role – spending more time managing and analyzing the business rather than simply working inside it.
For FVC members, that means knowing your numbers at the enterprise level. What does it actually cost to raise a calf, grow an acre of vegetables, or produce a dozen eggs? Which customer or market produces the best margin after transportation, packaging, and labor? Is every leased acre contributing to the operation? Does that equipment purchase save enough labor or expense to justify another payment?
The objective is not simply to cut expenses. It is to protect productive capacity while eliminating costs that do not generate sufficient return.
Talk to Your Lender Before There Is a Crisis
One of the strongest messages in the report is the importance of the borrower-lender relationship. Do not wait until you cannot make a payment to begin the conversation.
Producers should plan credit needs using realistic assumptions about yields, prices, and production costs. When circumstances begin changing, involving the lender early demonstrates that the producer understands the problem and gives both parties more time to develop solutions.
That conversation may include restructuring debt, extending repayment periods, reconsidering equipment purchases or evaluating operating credit.
USDA Farm Service Agency programs should also be part of the discussion. The report notes that FSA direct and guaranteed loans can provide additional financing options during difficult periods, while restructuring existing debt over a longer repayment term may help address near-term cash-flow pressure.
Farmer veterans should not view asking for financial assistance as a last resort. Using available financial tools before an operation reaches a crisis point is simply good business management.
Don't Assume Diversification Automatically Means Profit
When commodity margins decline, alternative crops and new enterprises become attractive. They can be part of the solution – but only when there is a market.
The report cautions that higher-profit alternative crops frequently carry higher risks. New crops should be evaluated from production, market, financial and legal perspectives, and history is filled with niche crops that generated excitement before experiencing volatile markets or production problems.
For a farmer veteran considering specialty crops, livestock, agritourism or value-added production, the first question should therefore not be, “Can I grow it?” The first question should be who will buy it, at what price, in what quantity and for how long? Secure the market before making major investments to serve it.
Capture More of the Food Dollar
For smaller farms, competing solely as commodity producers can be extraordinarily difficult. Another strategy is capturing more value from what the farm already produces.
The report makes a striking point, of every consumer dollar spent on food, only about nine cents return directly to farmers. Much of the remaining value is captured through processing, transportation, marketing, retail, and other activities. That creates an opportunity.
Direct-to-consumer sales, institutional markets, food hubs, branded products, local processing, and other value-added strategies can allow producers to capture more of that value.
For FVC members, Homegrown By Heroes can play an important role in that strategy. The label provides an opportunity to differentiate veteran-produced agricultural products in a marketplace where consumers increasingly want to know who produced their food and the story behind it.
But value-added does not necessarily mean buying expensive processing equipment. The report warns that processing can require significant investments in equipment, land, labor, volume, and management expertise – investments that may be unrealistic for an individual small farm. Sometimes the better answer is collaboration.
Cooperation May Be the Competitive Advantage
Small farms may not have the purchasing volume of large operations, enough production to fill major contracts, or sufficient capital to own processing and distribution infrastructure independently. Together, they may.
Cooperatives can help producers purchase inputs, aggregate production, process products, store commodities, market collectively and reach customers that would otherwise be inaccessible. The report specifically identifies cooperatives as a mechanism through which smaller producers can reduce costs, participate in other portions of the supply chain, and strengthen resilience.
Local markets offer another opportunity. Small farms can work through food hubs or sell to schools, churches, restaurants, and other institutions, particularly when producers coordinate production and aggregation.
This is an area where the FVC network itself can become an economic asset. Farmer veterans do not necessarily have to solve every challenge individually. Members can identify other veteran producers within their regions, explore aggregation, share market intelligence, and pursue opportunities that would be difficult for one operation to serve alone.
Build the Farm That Can Survive the Next Downturn
Perhaps the most important lesson from the report is that resilience is built before it is needed. Farm operations should work over time to maintain cash reserves, improve liquidity and solvency, manage known risks through insurance and farm programs, and build equity. That will look different on every farm.
For one farmer veteran, resilience may mean reducing machinery debt. For another, it may mean adding a direct-market enterprise, renegotiating a lease, improving crop insurance coverage, or developing an off-farm income stream. For another, it may mean joining with neighboring producers to reach a larger market. The important thing is to act while choices still exist.
Agriculture has always moved in cycles. The farms that emerge strongest from difficult periods are not necessarily the largest operations. They are often the operations that understand their numbers, communicate early with lenders, protect working capital, manage risk, know their customers, and remain willing to adapt.
Farmer veterans already understand something fundamental about resilience. Difficult conditions require clear thinking, disciplined decisions, and the willingness to change the plan when circumstances change. The goal in 2026 is not simply to endure another difficult agricultural cycle. It is to use this moment to build stronger farm businesses – businesses capable of surviving today’s downturn and being ready for the opportunities that will come when the cycle turns again.
I invite you to continue this conversation with us at the Farmer Veteran Coalition Annual Stakeholders Conference, October 25-27, 2026 in Colonial Williamsburg, Virginia. This year’s conference will bring together farmer veterans, agricultural leaders, educators, policymakers, industry partners, and fellow producers to share practical strategies, new ideas, and resources that can help strengthen farm businesses in uncertain times.
Whether you are working to improve profitability, explore new markets, manage risk, adopt new technology, or simply connect with others who understand the challenges of agriculture, there will be much more to learn – and even more value in learning together. We hope you will join us in Williamsburg as we look beyond surviving today’s downturn and focus on building stronger, more resilient farms for the future.
FVC is a proud AGFTAP Farm Champion. To learn more, email support@farmvetco.org or call 855-FVC-FARM.
Jeanette Lombardo
Chief Executive Officer
National Farmer Veteran Coalition
