Machinery harvests corn in Scotts Bluff County, Neb., last year. Low prices for row crops and high costs for fertilizer are squeezing Midwest row-crop farmers while the Southeast is still on an economic winning streak, according to a Stateline analysis of federal economic data for the first quarter. (Gary Stone, Nebraska Extension/Courtesy of University of Nebraska-Lincoln)
Global clashes and trade wars hammered Midwestern states’ agricultural economies early this year, while a continuing boom in Southeastern states’ housing and tech jobs kept their economies humming along.
Some Southeastern states were seeing a strong agricultural economy because of still-rising poultry and egg prices, though small row-crop farmers there were still caught in the crunch of high costs and low profits, and many declared bankruptcy. And the area benefited from gains in real estate and tech.
Overall, 39 states and the District of Columbia saw drops in gross domestic product (GDP) for the first quarter of this year — well above the 22 states and the District of Columbia seeing drops during the same time in 2024, according to a Stateline analysis of preliminary U.S. Bureau of Economic Analysis statistics released June 27.
National numbers released late last month show a rare decrease in economic output for the first quarter, the first since 2022, partly because of increased imports as suppliers sought to stock up on imported goods ahead of tariff increases. GDP is calculated by subtracting imported goods from national economic output.
There’s widespread agreement that row-crop farmers are suffering economic pain, especially in the Midwest where the industry dominates the economy. Meanwhile, the booming housing and tech sectors in the South are on a continued winning streak even as storm clouds gather over tariffs and immigrant labor.
Nationwide, more farms filed for Chapter 12 bankruptcy from January through March than in any full year since 2021, driven by higher costs for supplies and lower prices paid for row crops such as corn, soybeans and wheat.
“Crop prices and commodity prices are significantly lower, and fertilizer and equipment prices are higher, so we’re seeing a bit of a struggle right now in the farm economy,” said Abygail Streff, an economist and policy analyst at the Nebraska Farm Bureau.
Meat prices are one of the few bright spots in Nebraska’s farm economy, Streff said. “For a lot of producers who have cattle, this has been a really good year for them.”
Still, Nebraska, along with Iowa, suffered the biggest drop in GDP, according to the analysis. Each state fell 6.1% from the same time a year ago.
The squeeze on farmers from high fertilizer prices and low grain prices means they must produce more and more corn just to pay their fertilizer costs, said Josh Linville, a fertilizer market analyst at StoneX.
Fertilizer supply has been disrupted by sanctions against Russia, and it’s gotten worse this year with the bombing of Iran and the trade war with China, two countries that are also important fertilizer suppliers to American farmers, Linville said.
“We tend to think of the Middle East and the Strait of Hormuz [a shipping channel under threat by conflict] from an oil-slash-energy perspective, but 1 out of every 2 tons of urea fertilizer that gets shipped to the United States comes from the Middle East,” Linville said.
Despite being a drain in the Midwest, agriculture was a positive driver of economies in Alabama, Arkansas and Mississippi, according to Stateline’s analysis.
That’s because Southeastern agriculture includes more poultry and eggs, currently more profitable than the row crops that dominate in the Midwest, said Wendiam Sawadgo, an extension economist at Auburn University. The divergence is expected to last, he said, with row-crop prices continuing to fall and meat and egg prices continuing to rise this year.
But even in the Southeast, row-crop farmers suffered.
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Arkansas saw a near-record number of farm bankruptcies this year, for example. And climate change has contributed to lower soybean prices as low water levels in the Mississippi River make barge transportation more difficult and expensive, according to reports this year by the University of Arkansas’ Agricultural Economics & Agribusiness Department.
Farm bankruptcies nationally came to 259 in the first three months of this year. That was more than any full year since 2021, when there were 276, according to cases compiled by Ryan Loy, an agricultural economist at the University of Arkansas. Arkansas saw 15 farm bankruptcies in the first quarter, almost as many as in all of 2024, when there were 16.
“We’ve already outpaced all of last year on a national scale,” he said.
Large farms can ride out struggles, but smaller farms are more likely to go bankrupt from increases in costs and lower market prices, a pattern that started in the early 2010s and got sharply worse in the past year, Loy said.
All five of the states with the fastest-growing economies were in the 12-state Southeast region defined by the U.S. Bureau of Economic Analysis. Even there, though, the percentages were slight: South Carolina (up 1.7%), Florida (up 1.4%), Alabama (up 1%), North Carolina and Arkansas (each up .8%) had the largest increases in the nation.
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The largest drivers in Florida, North Carolina and South Carolina were real estate and tech, while increases in Alabama and Arkansas were mostly in agriculture.
The Carolinas have been magnets for new movers, said Matthew Martin, a Charlotte, North Carolina-based regional executive for the Federal Reserve Bank of Richmond. The influx has driven more housing and infrastructure work to supply newcomers, he said.
“Employment in South Carolina is on fire right now and North Carolina is doing well also. They’re places that people want to be,” Martin said. “Employers want to be there, too, and so there’s been population growth. Then you’ve got to have all the retail and health care. That has got to follow it.”
Business owners are uncertain about future federal policy in the Trump administration, Martin said, according to conversations he’s had.
They worry about tariffs, whether they’ll have to raise prices or accept lower profits, and eventually whether those factors could cause job growth to stall. And some businesses that depend on immigrant labor say they’ve lost workers despite using the national E-Verify system to make sure employees have legal status to work, Martin said.
Martin hasn’t heard of many workplace raids in the Carolinas, but there have been some federal audits of employee forms to check for false statements.
“Some of the workers won’t show up from that day forward,” Martin said.
Stateline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Stateline maintains editorial independence. Contact Editor Scott S. Greenberger for questions: [email protected].
This post was originally authored and published by Tim Henderson from Missouri Independent via RSS Feed. Join today to get your news feed on Nationwide Report®.
