When half of your industry is struggling while the other half is swimming in profits, what does winning actually look like?
Three quarters of the way through 2025, the chasm is widening in the agricultural industry. The northern and southern hemisphere are flush with crops, while tariffs and trade tensions, inflated input costs and interest rate resets combine to move the row crop and grain industry to Phase II of a deep trough.
On the other hand, livestock and value-added businesses powered by supply and demand imbalances and consumer spending are driving profits to new levels, particularly in the beef industry.
With a split economic personality in agriculture, what do wins look like for the remainder of 2025 and for 2026?
Breakeven at best
The grain and row crop industry is analogous to an athletic team with a streak of injuries, hanging in there just to make the playoffs. A win this year could be moving back toward breakeven, finding ways to minimize losses or preserving working capital that was built during the COVID-19 era.
The critical question becomes this: How deep and for how long can a business sustain losses without refinancing, selling off assets, or receiving capital infusions from other businesses or personal accounts and investments?
If refinancing becomes necessary, a win could be developing a comprehensive cash flow budget, and using it to plan and monitor at least quarterly, allowing for timely adjustments. Another win might be successfully servicing your debt by paying down principal on intermediate and long-term debt. Not carrying over operating debt is a win.
Recently, a producer told me a win was simply not allowing his accounts payable and credit card debts to accumulate.
Profit train wrecks
A warning for livestock producers and, particularly, the beef industry: Historically, the worst decisions are made in the positive parts of the economic cycle. When you are on a winning streak, wins take on entirely different meanings.
A true win is the discipline to follow a plan that protects your profits through executed and monitored risk management strategies. A win means:
- Not getting too far over your economic skis.
- Avoiding expansion that is too rapid.
- Preventing debt from outgrowing your management skill set
- Resisting the dangerous mindset that “it is different this time” and this upside cycle will continue forever.
Perhaps the most important win is maintaining the discipline to build financial liquidity in assets that can be converted to revenue and cash quickly. Carefully examine current assets from a 30-, 90- and 180-day perspective. Balance assets against expenses, debt servicing and capital purchase needs (not necessarily wants).
Build in a 25% cushion to account for value changes because markets are often “stairs up and elevators down.”
Beyond economic wins: Prioritize yourself
Get out of the “rut” mindset. Engage with individuals who maintain a positive outlook. Personally, I have returned to reading books by authors like Tom Peters, Ken Blanchard, John Naisbitt and Jim Collins. Many top writers now offer podcasts for quick inspiration.
Reflect and take care of yourself physically, mentally and spiritually. Staying healthy on both levels could be the biggest win in an agricultural economy with such a pronounced split personality.
The key to navigating 2025's agricultural paradox isn't just about the numbers on your balance sheet. It's about maintaining perspective, protecting what you've built, and investing in your most valuable asset: yourself.