Economic Pulse: Input costs to hit record high in 2027

The latest Commodity Cost and Returns report from the U.S. Department of Agriculture provides the first comprehensive look at how recent disruptions in global energy and fertilizer markets are filtering down to the farm level.

Released after months of volatility stemming from conflict involving Iran and concerns over shipments moving through the Strait of Hormuz, and as expected, the updated estimates indicate production costs are predicted to be higher than previously anticipated for every major crop for the 2026 growing season.

USDA’s new 2027 cost of production forecast reveals farmers may not see meaningful relief from elevated production costs anytime soon.

Preliminary projections show total production costs continuing to rise for most major crops, pushing all commodities to record highs.

Higher production costs are driven not by fuel and fertilizer in 2027, but rather by higher prices for seed, chemicals, repairs, labor, machinery and cash rents expenses.

For many crops, projected 2027 costs exceed not only USDA’s previous forecasts, but also the highs experienced during the supply chain disruptions and inflationary pressures of the early 2020s.

Since 2005, total production costs have more than doubled for several major row crops — including soybeans, up 165%; corn, up 146%; and wheat, up 106%.

Much of the increase in USDA’s updated cost estimates can be traced to higher fuel and fertilizer expenses. Compared to USDA’s earlier 2026 projections, fertilizer costs were revised 9% to 13% higher across major crops, while fuel, lube and electricity expenses increased 33% to 41%.

The recent easing of tensions in the Middle East and the end of the Iran conflict could provide some relief to global energy markets. USDA does predict that fuel and fertilizer prices will drop in 2027 as the Strait of Hormuz opens and resumes normal traffic.

However, high production expenses in other categories and low commodity prices will likely continue weighing on the economic viability of farms. USDA will revise its forecast in November.

Recent policy actions, including economic assistance for farmers and improvements to the farm safety net included in the One Big Beautiful Bill Act, provide important support, while continued progress on a new farm bill and other efforts to strengthen the farm economy could help producers amid ongoing market uncertainty.

Here’s How The U.S. Eradicated Screwworm And Can Do It Again

The recent detections of New World screwworm in Texas and New Mexico represent the most significant animal health challenge posed by the pest in the United States in nearly 60 years.

While the cases remain limited in number and do not threaten the safety of the U.S. food supply, they serve as a reminder that eradication is not a one-time achievement, but an ongoing process that requires vigilance, resources and cooperation.

New World screwworm is a parasitic pest that infests the living tissue of warm-blooded animals, including livestock, pets, wildlife and, less commonly, birds and people.

The good news is that New World screwworm is a pest the United States has defeated before.

The Sterile Insect Technique — where sterile flies are released into the wild to mate with females, producing no offspring — breaks the reproductive cycle and has a proven track record.

Success, however, will depend on quickly identifying new cases, maintaining robust surveillance and ensuring adequate sterile fly production capacity to stay ahead of the pest’s spread.

For farmers and ranchers, the most important action remains simple: inspect animals regularly and treat and report suspicious wounds immediately.

The speed with which farmers, veterinarians and regulators work together in the coming months will largely determine how quickly New World screwworm can once again be pushed south of the U.S. border.

James Henry is the executive editor of Illinois AgriNews and Indiana AgriNews.