Montana Grain Farmers Face Economic Downturn Amid Historic Inflation and Low Commodity Prices
Even before the Strait of Hormuz cut off fuel and fertilizer supplies, uncovered row crop losses have totaled $43 billion in recent years as lawmakers attempt to provide aid to farmers and push the 2026 Farm Bill across the finish line
By Maggie Dresser
Since the last time the United States Department of Agriculture (USDA) Farm Bill was passed in 2018, farm production expenses have surged 40% as labor costs, interest rates and overall input costs continue to rise nationwide while commodity crop prices sink, according to an American Farm Bureau Federation (AFBF) economist.
AFBF Vice President of Public Policy and Economic Analysis Dr. Kevin Newton told a Kalispell audience at the Montana chapter’s conference on June 16 that the American farmer was experiencing historic inflation even before the war in Iran closed the Strait of Hormuz, which spiked prices even higher.
“Every single input cost is more expensive today than what it was a few years ago,” Newton said.
According to AFBF data, nationwide contract labor costs have increased 74% since 2018, interest rates have grown 60% and fertilizer is up 54%.
Meanwhile, the Strait of Hormuz’s closure over the last four months has prompted increased diesel prices, which have hovered around $5 per gallon in Montana. Fertilizer prices also spiked dramatically when 40% of the global supply was suddenly cut off.
Global tensions with Russia and China – the top fertilizer exporters in the world – has left the United States more dependent on exports from the Middle East.
“When the Strait was closed – as we all know – that lifted fertilizer prices globally and impacted our farmers around the country,” Newton said.
In Montana, 54% of farmers pre-booked fertilizer for their spring crops before prices were impacted, but Newton said all producers will be affected during the fall planting season and prices will likely stay high even if the Strait reopens
As input costs continue to rise, commodity prices are low for the third consecutive year, with the USDA projecting price drops compared to recent highs.
For example, wheat prices are projected to go up slightly compared to last year, but prices are forecast at 26% below recent highs while barley is expected to sink 24%.
“All of these crops are well below the highs that we saw in recent years, yet the input costs have not improved – they’re still very, very elevated and that’s what’s created this challenging economic environment that we’re in today,” Newton said.
Newton said row crop production compared to revenue has penciled out to roughly $40 billion “in the hole” over the last few years as young farmers experience “the toughest economic environment they’ve ever seen.”
According to AFBF data, the total cost of row crop production between 2023 and 2026 was $719 billion while crop revenue was only $607 billion, amounting to $43 billion in uncovered losses before the Strait of Hormuz closed.
Additionally, imbalanced trade has resulted in the importing of $44 billion more food and agriculture products in the United States than farmers exported.
As part of the One Big Beautiful Bill Act signed by President Donald Trump last year, the bureau is expecting between $15 billion and $17 billion in farm program payments to be delivered this fall.
“It’s not sustainable – and I think members of Congress know this,” Newton said.
But while row crop farmers continue to face economic hardship, historically high cattle prices are helping compensate for low grain prices.
“We’re in our third our fourth year – depending on the crop – of downturn and it’s been the cattle business and the dairy business that’s helped to support the farm economy,” Newton said.
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Newton said as the 2026 Farm Bill makes its way through the Senate in the coming weeks, there’s still “a lot of work to do” to support producers, which includes raising Farm Service Agency (FSA) loan limits.
The farm bureau is also pushing for the elimination of Prop. 12, a California animal welfare ballot initiative that would impact pork producers in all 50 states by prohibiting the sale of uncooked whole pork meat not produced according to the state’s arbitrary housing dimensions, an element to the Farm Bill that Newton calls the “biggest issue.”
Additionally, the bipartisan Agriculture Labor Bill is expected to roll out at the end of the month, which is being crafted to address the severe labor shortage with reforms to the H-2A guest worker visa as applications from farmers rise.
“As long as I’ve been with the Farm Bureau, I’ve never seen unanimous support from our board on an ag labor issue like we saw this time,” Newton said. “All board members said we need to endorse this. We haven’t done meaningful ag labor reform in 40 years.”