Amid geopolitical tension and El Niño jitters, two recent reports underscore the uncertainty farmers on both sides of the equator face as they head into 2027.
Purdue’s most recent Ag Economy Barometer, released last week, noted that overall US farmer optimism is up slightly, but those reporting a strong balance sheet declined from 76% in January to 60% in October.
“While producers saw some relief this month due to government program support, many remain uncertain about how future policy decisions could affect agriculture,” says Michael Langemeier, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture.
“Responses to our policy questions suggest that concerns about trade policy and the country’s broader direction are shaping how producers view agriculture’s long-term prospects.”
Washington is holding up US farm income
Echoing that, McKinsey this week released a new analysis noting that while US net cash farm income in 2026 is roughly flat with 2025, direct government payments jumped from $28 billion to $47 billion over the same time period (roughly 27% versus 16%). This is largely thanks to initiatives like the Farmer Bridge Assistance program and the Harvest Fuel Relief program, among others.
Having about a quarter of farm income come from government payments is “very much an anomaly,” says US-based McKinsey partner Tom Brennan.
He adds that it’s tough to predict whether Washington will write another check in 2027, and fertilizer may be the bigger swing factor here. Farmers who bought inputs in fall 2025 were shielded from the jump in nitrogen and phosphate prices after February’s disruption in the Strait of Hormuz. They haven’t bought for 2027 yet, and McKinsey is surveying them now on their plans.
Farmers tend to cut back on phosphate and potash before nitrogen, Brennan says. “You can do that for a bit, but eventually you’re getting pretty deficient in the soil within a year or two.”
What could actually aid US growers, he adds, is a weaker South American harvest due to El Niño, which would firm up commodity prices.
Pricier inputs and El Niño uncertainties
In Brazil, the Selic benchmark rate remains high compared with 2020–21, when many farmers took on debt. Brazilian banks have also pulled back on new lending to focus on their existing loan books.
“When your financing costs are high, when fertilizer and fuel costs are high, it’s not necessarily reflected in the [price] of your output,” says Tim Lillie, a McKinsey partner based in Argentina.
McKinsey’s new report shows fertilizer affordability in the Mato Grosso state of Brazil at multiyear lows. Growers now need about 50 bags of soybeans to buy a ton of MAP fertilizer, up from 43. And 68% of Brazilian farmers surveyed named extreme weather among their top three risks.
Lillie cautioned that El Niño cuts both ways. Specialty crop yields in Peru are already suffering. Argentina and parts of Brazil, though, could see more rain and possibly better yields. “Could is the operative word,” he notes.
What it means for agtech
McKinsey’s global survey of 5,500 farmers, fielded in March and April, found a “laser focus on ROI” among North American farmers weighing precision ag tools. In Europe, usability mattered as well.
The biostimulants category is resilient despite the turbulent times, and is “now an established part of the farmer portfolio,” says Brennan. Farmers reported getting $20 or more back for every $10 an acre they spent, and plan to keep spending at least as much.
The survey didn’t measure whether farmers are trialing fewer new ag technologies or practice changes (e.g., no till, cover cropping). But Brennan says McKinsey has heard anecdotally from farmers, retailers and companies that when times get tough, growers are less eager to experiment than in boom years.
Gloomy as they may look, the overall numbers mask big differences from one region, farm, and crop to the next, explains Lillie. Some farmers still plan to buy new machinery this year, while others are holding off on big purchases until they have more certainty.
“When you look at it as an overall average, yes, there’s messages there you have to take away,” he notes. “But particularly getting into the detail, you start to see there are still opportunities out there.”
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