Farmers Preserve Cash As Margins Pressure Spending Decisions

Farmers are cutting back on fertilizer and equipment spending as margins tighten.

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NASHVILLE, Tenn. (RFD News) — Farmers are becoming more selective with spending as tight margins push operations to preserve cash and demand clearer returns from major purchases, according to McKinsey’s 2026 Global Farmer Insights survey.

McKinsey surveyed 5,500 farmers across 10 countries. Net spending expectations fell 24 percentage points from 2024, while more than 35% said nutrient spending would be among the first areas reduced when margins tighten.

Fertilizer and farm equipment showed the greatest sensitivity. Farmers often reduce fertilizer first to preserve cash, while 16% cited equipment as an early cut. Equipment also showed the strongest expected rebound when profits recover.

The findings match broader pressure from elevated fertilizer, energy, labor, equipment, and financing costs. McKinsey says producers increasingly require clear near-term returns before committing scarce capital.

The survey suggests spending recovery could be uneven, with essential inputs recovering sooner and discretionary purchases depending more heavily on profitability and proven value.

Farm-Level Takeaway: Tight margins are pushing farmers to protect cash and demand stronger returns before increasing spending.
Tony St. James, RFD News Markets Specialist

Tony St. James joined the RFD-TV talent team in August 2024, bringing a wealth of experience and a fresh perspective to RFD-TV and Rural Radio Channel 147 Sirius XM. In addition to his role as Market Specialist (collaborating with Scott “The Cow Guy” Shellady to provide radio and TV audiences with the latest updates on ag commodity markets), he hosts “Rural America Live” and serves as talent for trade shows.

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