Agriculture and Cooperatives: What’s on the Horizon for 2026

Greg Cargin, CPA, Partner

While the past year proved to be very challenging for many of our clients, there were still some good stories to tell. As we look ahead to 2026, it’s important to reflect on recent trends and consider what will shape the year ahead. Many of the factors that influenced 2025 remain relevant, and new dynamics will continue to impact decision-making and strategy.

As we begin the new year, it feels like there is more optimism out there than at this point last year. While there are certainly challenges ahead, there are some tailwinds and opportunities for growth across the industry.

• Grain - Record, or near record harvests for corn in many places and increases over prior year soybean receipts. While the larger harvest presents significant opportunities for elevators to handle and merchandise more bushels, there is still a long way to go in marketing the bushels. Headwinds such as logistics challenges, interest costs, trade policy, and global supply-and-demand will need to be navigated, but overall, the increased volume is a positive development compared to last year.
• Agronomy – Fertilizer could see a boost with a large 2025 harvest requiring nutrients be put back in, hopefully helping to push fertilizer sales higher. Pricing concerns and facing another year of tight crop margins, farmers may also continue to evaluate their inputs for the 2026 crop year. It’s hard to envision margins on chemicals and seed products differing much as those seem to have some flat-lined in recent years. I do feel more companies are trying to evaluate their costs for services and trying to adjust as necessary with the significant cost increases to replace or repair application equipment in recent years.
• Energy - The competition for market share and gallons on the energy side continues to challenge many as well, especially in the retail side as competitors continue to move into new markets, disrupting current business and challenging margins.
• Expenses – Our clients continue to work on lowering their costs where they can, which has seen overall operating cost growth slow. Payroll growth has slowed some, though the challenge to find and retain talent is still significant. Insurance costs have reached a peak for many, whether rates are coming down or other strategies (captives) to manage those costs are at play. Although slight, recent decreases in interest rates have provided some relief. However, borrowing needs are expected to rise due to the larger crop and the timing of company ownership transitions. Banks have been asked to provide additional loan capacity this winter to support purchases of the record crop yields.
• Regional – Although many of the regional cooperatives continue to perform well, regional patronage will certainly continue to be lower from the highs in 2023-2024. This will have a significant impact on overall profitability for all our cooperative clients.
• Other thoughts:
  • Credit Risk – There are always exceptions, but most have maintained their credit policies and we haven’t seen a tremendous change in past-due receivables. I have to believe a much larger crop helped that, and we hope that trend continues. In a world that works with margins as tight as you do, credit and cash flow management are more important than ever to help manage interest costs.
  • Information and Data – Data continues to drive decision-making. Those who best understand their costs will be positioned to manage profitability despite the uncertainty inherent in agriculture. Many companies are actively evaluating the data they have, how they acquire it, and how they use it in a timely manner to strengthen market positioning. Understanding revenues and costs by customer, product, delivery, or field will become increasingly important. Achieving this will require current and accurate information, which may challenge the capabilities of some existing systems.
  • Capital Expenditures - While replacing rolling stock and equipment will remain a priority, larger projects in grain and agronomy are likely to stay on the table. Following a strong harvest, timelines for future expansions may be reassessed, as these investments help companies adapt to market pressures and create long-term value for cooperatives in a changing environment. In addition, many clients are exploring leasing options versus outright purchases as a strategy to manage capital costs and maintain flexibility in a volatile market.
  • Consolidation – After a year of lower earnings and continued industry pressures, some organizations may revisit boardroom discussions or at least monitor developments to ensure they are well-positioned should opportunities arise. Acquisitions of private companies may also become more common as those owners face the same headwinds impacting your industry.

As an auditor, I am much more proficient in looking backwards, evaluating what happened, what went right and what could have been better. Looking backwards is the trade that we practice, so please take any forward-looking thoughts for what they are. I’ll be interested to see what 2026 brings. Conversations with clients today feel better than they did 12 months ago, and it seems like there’s a little more optimism than we had at this time last year.

Despite the challenges of 2025, the future of agriculture remains bright. The agricultural sector has long demonstrated resilience, adapting to changing circumstances while continuing to drive efficiency, growth and profitability. As always, we are excited to work alongside some of the most dedicated people in the industry and to help guide you through the opportunities and obstacles that 2026 will bring. We look forward to continuing our partnerships with current clients and building relationships with new ones. Together, we will navigate the evolving landscape and continue to thrive in an ever-changing industry.