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Ben Peterson, a third-generation rancher in Fergus County, Montana, had plans to upgrade his farm equipment and livestock facilities to improve efficiency and bolster animal health. But both have been put on hold over concerns around mounting input costs and ongoing market volatility.
The building Peterson is using to house sheep is decades old, but tariffs on products like steel and lumber, coupled with mounting costs for other farm inputs, have left Peterson in a precarious position.
In addition to raising cattle and sheep, Peterson also grows small grains – wheat, barley and hay.
“The cost pressure is showing up everywhere – all our input costs: fertilizer, feed, minerals, everything. Everything costs more,” Peterson told reporters on a press call Tuesday. Accordingly, he said he can’t risk spending funds on infrastructure upgrades today that he may need for production costs later this year.
Farmers' production costs have ballooned more than 50% since 2011, while prices have grown 25%, according to Agriculture Department data published in December.
Peterson said this is visible across almost all the inputs he buys. The price of a respiratory vaccine he uses has grown from around $3.50 to roughly $6 in a year, he said.
“There's a reason almost everybody runs used, old equipment … because nobody can afford the new equipment, or the cost to repair that equipment,” he said. “Parts are harder to find and more expensive when you can find them.”
Peterson’s complaints mirror those from producers in other states. Nick Levendofsky, executive director of the Kansas Farmers Union, said on the same press call that his members are already anticipating higher costs in 2026.
“Some farmers are delaying equipment purchases. They're scaling back input use or reconsidering long-term investments because they don't know what markets or prices will look like,” Levendofsky said.
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Once adjusted for inflation, USDA is forecasting a downturn in capital investments for 2025. Estimates from December have total capital expenditures for 2025 falling almost 2% from the previous year, with machinery expenses falling more than 2% and land improvement expenses falling by a little over 1%. If these numbers materialize, it will be the first time expenditures have fallen in a year since 2018.
The Trump administration has been grappling with how to slow rising input costs and has taken steps in recent months to prioritize the issue. In September, Agriculture Secretary Brooke Rollins unveiled a memorandum of understanding with the Justice Department to scrutinize competition in ag input markets and beef up antitrust enforcement.
Further, President Donald Trump set up a food supply chain security task force last month to probe anti-competitive behavior and price fixing in food supply chains.
But the efforts have done little to reassure anxious farmers, who have heard similar promises before, Peterson said.
“We've heard this more than once,” Peterson told reporters, adding that he will believe the administration is taking aim at consolidation and monopolies in input markets only when he sees clear evidence.
“I will believe it when 
Brooke Rollins (Agri-Pulse photo)I see it, because I do not expect it,” Peterson said.
The administration also cut tariffs on some fertilizer imports in November when it added new carveouts from so-called “reciprocal tariffs” for urea and phosphate fertilizers. But while the tariff rollback eased wholesale fertilizer prices, those lower prices have not been passed through to retail customers, according to an analysis from North Dakota State University.
Two months after the tariff rollback, diammonium phosphate (DAP) fertilizer prices for retail customers remain $66 per metric ton above pre‐tariff levels, NDSU researchers find. Wholesale prices, however, are now within $21 per metric ton of the pre-tariff baseline.
Monoammonium phosphate retail prices have adjusted more quickly, they note, but urea prices also remain above pre-tariff levels.
The researchers also found that tariffs spurred price hikes in 2025 that went above and beyond the dollar value of the tariff. The new tariffs, they say, created supply chain disruptions and exacerbated preexisting market pressures that also drove prices higher.
“Price movements during the tariff period seemed to exceed the direct cost of the tariff itself,” the authors write. Tariffs on DAP were set around 8%, for example, but U.S. buyers saw price increases relative to their Canadian counterparts above that, suggesting a tariff passthrough of more than 100%.
Aaron Lehman, a fifth-generation farmer in central Iowa who is also president of the Iowa Farmers Union, questioned the logic of putting tariffs on farm inputs at all.
“It's wrong to put a crazy tariff on those inputs that we have to have,” Lehman said. “That just doesn't make any sense.” Lehman is not the only one who has questioned why an administration focused on lowering costs for U.S. ag producers levied tariffs on imported inputs. Iowa GOP Sen. Chuck Grassley has been a vocal proponent of reducing tariffs on ag inputs.
Lehman said that he is in favor of pushing for fairer trade terms with countries but argued that applying tariffs to advance that goal is like “trying to change a light bulb with a hammer.”
The dire economic circumstances faced by many rural communities, Lehman argued, are stifling innovation and hampering efforts to improve efficiencies that could insulate farmers from future shocks. Instead of putting any extra funds back into the business, producers are using them to "stabilize" their current economic situation, he said.
“We need to do a better job of asking for better from our elected leaders and our states and our communities,” he said. “Our members of Congress need to speak up loudly about the impact here on the ground and in our fields and in our communities, and they need to demand that Congress has a say in getting us to fair trade. They should get to work on the real issues that get us closer to that.”
