The letter K has become popular lately when describing a U.S. economy where the wealthiest Americans are thriving while everyone else is struggling to survive.

But another K shape has gripped the farm economy: costs continue to march higher while prices for crops have plunged.

Crop prices surged during the pandemic, then tumbled from 2022 through 2024 and regained only a modest amount of ground this year. But costs didn’t come down, and President Donald Trump’s trade war prompted China to stop buying U.S. soybeans.

The trends converged into a “perfect storm” this year, but date back to the middle of the last decade, according to Bernard Yaros, lead U.S. economist at Oxford Economics.

In a note last week, Yaros pointed out that for years, the crop prices farmers receive haven’t been keeping pace with production costs like fuel, fertilizer, and machinery.

The Federal Reserve’s aggressive rate-hiking cycle in 2022 and 2023 to fight inflation added to farmers’ costs as rates spiked on agricultural loans to finance routine expenses, capital spending, and farmland purchases, Yaros added.

Today, the result is a giant K seared across the agricultural sector.

Meanwhile, farm bankruptcies are heading back up, with the fastest growth in the top soybean-producing states, according to Yaros.

To be sure, the federal government has stepped up support for farmers. The One Big Beautiful Bill Act that was signed in July included about $66 billion in agriculture-focused spending. The vast majority, about $59 billion, is earmarked for farm safety-net enhancements.

The Agriculture Department has estimated that real net farm incomes will jump by nearly 40% this year after two years of declines. But about three-quarters of that growth is due to government payments, Yaros noted.

“As a share of GDP, government payouts will approach levels rarely seen outside of the 1980s’ farm crisis and the farm aid packages under the first Trump presidency,” he added.

The outlook for crop prices isn’t looking good, either, threatening to cement the K-shaped farm economy for longer.

China still has shown no signs that it’s going to buy 12 million metric tons of soybeans by year’s end, risking non-compliance with the trade deal Trump negotiated last month.

At the same time, farmers who switched to other crops when China wasn’t buying soybeans are seeing prices for corn, wheat and barley decline as those commodities are now being oversupplied.

A recent survey of economists by Farm Journal’s AgWeb offered a bleak picture marked by collapsing profit margins, limited trade opportunities, and stubbornly high costs.

In fact, 59% said the farm economy worsened from the prior month, and nearly 90% think it got weaker over the last year, with 76% seeing conditions persisting or deteriorating through 2026.

“Things are bad — even if it’s not the same type of bad as the ’80s,” one economist said. “The difference is this time, it’s a slow burn instead of a crash.”