Farm Production Costs to Hit Record Highs in 2027, USDA Projects
Updated USDA estimates show every major crop facing higher input expenses, with seed, chemicals, labor and cash rents — not fuel and fertilizer — driving new cost peaks next year
American farmers are bracing for another year of mounting expenses. According to USDA’s latest Commodity Cost and Returns report (link), total production costs are projected to reach record highs in 2027 for virtually every major field crop — a continuation of a years-long squeeze that has left producers with little margin for error.
The findings carry particular weight given the backdrop against which they were released. The report came out following months of energy market volatility tied to the Iran conflict and concerns over commercial traffic through the Strait of Hormuz. As expected, USDA’s updated 2026 projections show costs rising across the board, driven largely by surging fuel and fertilizer prices. But even as those pressures are expected to ease somewhat in 2027, a new set of cost drivers is poised to take their place — and push total expenses to levels never seen before.
The following is based on a Market Intel report (link) by the American Farm Bureau Federation.
New Highs Projected for 2027
USDA’s preliminary 2027 cost of production forecasts paint a sobering picture: total production costs are climbing for most major crops and pushing all commodities to all-time highs. Unlike the 2026 revisions — which were dominated by the spike in fuel and fertilizer — the 2027 increases are being driven by higher prices for seed, chemicals, repairs, labor, machinery and cash rents.
Rice carries the steepest projected per-acre burden at $1,427, followed by peanuts at $1,248 per acre, cotton at $1,001 per acre and corn at $952 per acre. Soybeans, sorghum and wheat are also on track to hit record levels.
Zooming out further, the long-term trend is striking. Since 2005, total production costs have more than doubled for several major row crops: soybeans are up 165%, corn has climbed 146%, wheat has risen 106% and rice is 103% higher. While commodity prices tend to fluctuate year to year, input expenses have only moved in one direction — and the 2027 projections suggest that trajectory is not changing.
Quote of note: “The record costs projected for 2027 suggest that rising input expenses are no longer a temporary challenge but a persistent reality facing farmers across the country,” AFBF noted in its analysis of the report.
2026 Revisions: Every Crop Revised Higher
Compared to USDA’s earlier 2026 projections, total production costs were revised upward for every major crop in the updated report. Rice saw the largest absolute increase — nearly $75 per acre, or 5.6% — followed by peanuts at close to $30 per acre (2.5%) and corn at more than $19 per acre (2.1%). No crop was spared.
The revisions align with findings from a recent American Farm Bureau Federation survey of more than 5,700 farmers, in which 70% of respondents said they were unable to afford all the fertilizer they needed for the 2026 crop year. That on-the-ground reality is now reflected in USDA’s own numbers.
Fuel and Fertilizer: The 2026 Culprits, with 2027 Relief in Sight
The bulk of the 2026 cost increases can be traced directly to the energy and fertilizer markets. Fertilizer costs were revised 9% to 13% higher across major crops compared to earlier projections. Fuel, lube and electricity expenses climbed even more sharply — up 33% to 41% depending on the commodity.
The biggest fuel cost increases hit sorghum (41%), peanuts (36.8%) and corn, wheat and rice (each above 34%). On the fertilizer side, rice saw an 11.7% increase while corn, soybeans and peanuts each climbed more than 11%.
However, USDA does project some relief ahead on those fronts. With the recent easing of tensions in the Middle East and the conclusion of the Iran conflict, the Strait of Hormuz is expected to resume normal commercial traffic. USDA anticipates fuel and fertilizer prices will decline in 2027 as a result. Not all cost categories moved higher in 2026 — seed and chemical expenses were revised downward for most crops, partially offsetting the bigger increases elsewhere.
Still, the net effect was higher total costs for every crop, and the 2027 forecast makes clear that even with fuel and fertilizer retreating, other cost categories will more than fill the gap. USDA will update its estimates again in November.
Policy Implications: Farm Bill, E15 and Safety Net Front and Center
The cost data arrives at a moment when commodity prices remain under pressure and farm margins are already stretched thin. AFBF’s analysis of the USDA report underscored the need for congressional action on several fronts: authorizing year-round E15 fuel sales, delivering additional market assistance and passing a modernized five-year farm bill.
Recent legislative developments have provided some support. Economic assistance provisions for farmers and improvements to the farm safety net included in the One Big Beautiful Bill Act represent meaningful near-term relief. But with production costs projected to keep climbing and commodity prices offering little cushion, the longer-term policy agenda — including a new farm bill — remains central to the financial viability of American agriculture.
USDA’s November update will be closely watched for any further revisions to both the 2026 and 2027 cost projections.
