US farm economy shows widening cracks as costs rise, jobs vanish

Across the U.S. farm belt, these have become depressing times. Farmers are facing another season of low prices, high costs and difficult decisions about how — or whether — to keep operating. Banks are cutting off some growers just as they urgently need cash. Thousands of workers are losing jobs as meatpacking plants close and farm ​equipment makers scale back.

Strain inside the U.S. farm economy is mushrooming across rural America, from unsold tractors sitting on dealer lots to agribusiness companies reporting shrinking earnings, as abundant grain supplies weigh on markets.

Crop prices have been weak and ‌production costs high for three years now. This year is shaping up to be equally grim, according to interviews with producers, farm economists and industry trade groups. And this week's final government crop data showed higher output than expected while corn inventories reached a December record: another red flag signaling low crop prices and farm profitability.

Any turnaround now rests on a fragile chain of events, they said, including a resolution of President Donald Trump’s trade wars, renewed buying from China and more favorable domestic biofuels policies. U.S. farmers would also benefit from unfavorable weather in rival grain-producing countries.

"You talk to farmers and they say, 'I don't know what I'm going to do'," said Sherman Newlin, an Illinois row-crop farmer and market analyst with Risk Management Commodities. "I know banks that are turning away farmers, and farmers saying they can't pay back last year's operating note. It's pretty depressing out here."

U.S. farmers produced massive corn and soybean ‌harvests this past fall, adding to a global glut of grain. Soybean farmers also missed out on billions of dollars in lost sales to China, by far the world's top soy buyer.