More Farms Are Closing. The Call for Government Intervention Feels More Like a Plea.

Arkansas is staring down one of the most difficult moments its farm economy has faced in recent decades. Farm closures are mounting, auction signs are appearing more frequently, and bankruptcy cases continue to climb. Even large-scale operations are beginning to show financial strain. For a state whose foundation is rooted in agriculture, the situation signals an urgent need for decisive action at both the state and federal levels to restore confidence and stability for farmers.

Financial assistance is needed, but it alone will not solve the problem. Experts emphasize that farmers now need more than emergency aid and require structural reforms, practical guidance, and a clear pathway to making farming viable under today’s conditions. Without this long term support, Arkansas could face even greater losses in the year ahead, with repercussions extending far beyond individual farms to impact the broader state economy.

Declining Health of Arkansas Agriculture

Farming remains the backbone of Arkansas’s economy, generating more than $24 billion and accounting for 14 percent of the state’s total economic output. It sustains a wide network of jobs including mechanics, crop dusters, lenders, lawyers, and laborers whose livelihoods depend on a stable agricultural sector.

Arkansas takes pride in its farming legacy and has rolled out multiple programs aimed at supporting producers, while federal subsidies continue to inject billions into the state’s agricultural system. But these efforts have not stopped the downward trend. Census data shows that Arkansas lost 11,000 farms between 1997 and 2022. The pressure intensified in 2023 and 2024 as farm incomes fell alongside commodity prices, according to the University of Missouri Rural and Farm Policy Finance Analysis Center. By 2025, volatile trade conditions and tariffs placed even greater strain on an export-dependent farm economy. Much of the government support ended up propping up operations that were not built for long-term sustainability, rather than solving the underlying issues holding the industry back.

Rocketing Cost of Farming

Costs across the farming sector have escalated to punishing levels. Fertilizer prices have remained high for most of this year, with phosphates in particular reaching record-low affordability for U.S. farmers. Data from the University of Arkansas System Division of Agriculture Cooperative Extension Service shows that fertilizer expenses have stayed elevated since 2022, driven largely by price spikes that followed the Russian invasion of Ukraine earlier that year.

Seed costs have also remained burdensome. Expenses rose by $70 million, or 15 percent, in 2021 and climbed again by $110 million, or 20 percent, in 2023. While seed costs fell slightly by $16 million, or 2 percent, in 2025 compared to 2023 and saw a modest $9 million, or 1 percent, increase in 2025, the overall trend still points upward. According to the U.S. Department of Agriculture, seed prices have risen about 25 percent since 2020.

Labor costs are projected to reach a record $413 million in 2025, representing an average increase of $29 million, or 9 percent, since 2021. These rising expenses put U.S. farmers at a disadvantage compared to producers in countries with lower labor costs and fewer regulations. Interest expenses are expected to return to 2023 levels, declining $23 million year over year due to slightly lower rates. However, since April 2022, interest costs have risen by $182 million, or 46 percent, following several increases to the Effective Federal Funds Rate.

Even with the Federal Open Market Committee reducing rates on September 17 to an effective rate of 4.09 percent, interest costs remain a significant burden that continues to squeeze farmers’ margins. Estimates from the 2025 long grain rice enterprise budgets show that per-acre interest expenses are on average $15 higher than in 2021. For a 500-acre farm, that translates to roughly $7,500 in additional costs. This financial strain cuts into profits and weakens the overall economic health of rural communities that rely heavily on agriculture.

Weakened Buying Power

The purchasing power of the crop dollar has steadily weakened in recent years. Monthly crop price indices from the U.S. Department of Agriculture’s National Agricultural Statistics Service, going back to 2011, reveal a growing gap between crop prices and input costs. Experts note that “Crop prices relative to input prices have declined, and the spread between the indices continued to widen from the 2014 Farm Bill until the pandemic in 2020.”

Although crop prices spiked in 2022 and 2023 due to supply chain disruptions, those same disruptions also drove up input costs. As a result, the gains from higher crop prices were largely offset. Today, the gap between crop prices and input costs is the widest it has been in at least 25 years, underscoring the unusually severe economic pressures facing agricultural producers in 2025.

Intensifying Global Competition

Arkansas farmers have long relied on easily exportable row crops such as rice, soybeans, corn, and cotton, which historically delivered high yields and strong profits. In recent decades, however, global competition has made cultivating these crops increasingly difficult. Countries like Brazil and Argentina have improved production methods and benefit from lower costs, including cheaper labor and favorable regulations, while Arkansas farmers continue to face higher overhead expenses. Trade tensions and tariffs have further constrained U.S. farmers’ ability to compete internationally.

Soybeans once provided significant income for Arkansas farmers, but over the past decade, Brazil’s soybean harvest has grown from 95.7 million tons to 169 million tons, capturing 40 percent of global production and driving down worldwide prices. China, historically a major buyer of Arkansas soybeans, has shifted to Brazil as its primary source for livestock feed due to American tariffs.

At the same time, Brazil and China have significantly increased their corn production, reducing China’s dependence on U.S. imports. Arkansas farmers also continue to face challenges accessing East Asian rice markets, where the majority of rice is grown and consumed. Domestically, they are increasingly undercut by rice imports from India, Thailand, and Pakistan. Cotton producers face similar pressures, with global competition affecting both prices and overall profitability.

Delayed Farm Bill

Farmers are responding to the ongoing economic crisis by lobbying the federal government for support, as any industry would in challenging times. Over the past five years, Arkansas farmers have received substantial aid. Between 2020 and 2023, the federal government provided nearly $3 billion in pandemic-related assistance. In 2024, aid dropped to $256 million, primarily from conservation programs and disaster relief. In 2025, farmers are projected to receive $1 billion in emergency payments authorized in 2024. These funds are bolstering farm incomes even as revenue from crop sales continues to decline.

However, delays and uncertainty surrounding the Farm Bill have drawn criticism from many. The Farm Bill, a comprehensive piece of federal legislation updated roughly every five years, has been stalled for years due to partisan gridlock. Arkansas Senator John Boozman, chair of the Senate Agriculture Committee, leveraged his position to secure support for commodity farmers within Trump’s One Big Beautiful Bill. Passed along party lines, the Republican legislation added $60 billion in subsidies, crop insurance, and conservation funding for farmers.

But Boozman has indicated that Congress could still pass a “Skinny” Farm Bill later this year to fund programs excluded from the Big Beautiful Bill. Critics, however, argue that this approach may have weakened bipartisan support for the legislation. 

Industry advocates are also urging Congress and the Trump administration to allocate a portion of tariff revenue to offset farmers’ losses, similar to measures implemented during Trump’s first term.

Even if Congress approves additional payments this year and passes some version of the Farm Bill, experts warn that deeper structural issues remain.  The federal government needs to fundamentally rethink its approach to agriculture.

For decades, Washington’s bipartisan agricultural policy has emphasized maximizing yields of commodity crops. Today, some policymakers and experts are calling for a new approach: overhauling the Farm Bill to support diverse farms and varied production rather than relying mainly on large-scale commodity exports. Many view this strategy as crucial for helping smaller farmers stay viable. Current financial incentives often favor large-scale operations, highlighting the need for reforms that could gain broader support and deliver meaningful relief in the coming years.

Bleak Forecast for Arkansas Crops, Demand for Support

Analysis from the UADA shows that Arkansas farmers are likely to face significant losses this year across their main crops, including corn, cotton, rice, and soybeans. The report, The State of the Arkansas Crop Economy in 2025, conducted by extension economists Hunter Biram, Ryan Loy, and Scott Stiles, calculated net returns by factoring in expected yields, prices, revenues, operating costs, and rent.

The findings project per-acre losses of $273.71 for corn, $352.75 for cotton, $258.84 for long grain rice, and $85.02 for soybeans.

“No matter what the yields, the prices are so low and expenses so high. We had record yields in 2024, and farmers still lost money. You cannot yield your way into profitability this year,” said Deacue Fields, vice president for agriculture at the University of Arkansas System. Row crop economics are clearly under particular strain. With what appears to be a third consecutive year of losses, growers are not in a strong financial position, highlighting the urgent need for action.

Some critics may question why the government should provide more funding to agriculture, noting that farming has always been a risky and unpredictable business. Planting a crop involves significant expenses, including seed, machinery, fertilizer, fuel, pesticides, water, and labor, with no guarantee of profit at the season’s end. Yet agriculture remains essential to both the state and the nation, and it is not just about profits. Given that many challenges stem from federal policies, it is the government’s responsibility to ensure farmers have stability and support.

One fact is clear: insecurities in Arkansas’s agricultural sector persist, and addressing them must be a top priority for policymakers. A University of Missouri report predicts that farm income in the state could fall by nearly $1 billion in 2026 as emergency payments expire and commodity prices remain low. The Agriculture Council of Arkansas warns that without another round of federal support, one in three Arkansas farms could close next year. State and federal authorities face urgent pressure to act to support struggling farmers and protect the economic backbone of Arkansas.