Affordability Under Pressure: Challenges Across the Food Supply Chain
Affordability continues to be one of the biggest challenges facing stakeholders across the food and agricultural supply chain. Farmers are grappling with rising input costs for essentials like fertilizer and fuel, while distributors, retailers, and consumers continue to feel the strain of persistent inflation and economic uncertainty. These pressures are reshaping purchasing decisions, consumption patterns, and confidence in the economy at every level. This webinar explores how inflation, economic shocks, and shifting consumer behavior are impacting producers, businesses, and households alike.
Michael Langemeier (Purdue University) – Trends in Farm Input Prices
Michael Langemeier examined how inflation and rising input costs have affected farm profitability since 2021. Using Indiana corn production as an example, he showed that breakeven prices increased from approximately $4 per bushel in 2021 to more than $5 per bushel in subsequent years, reflecting roughly a 25% increase in production costs. He noted that USDA input price indexes rose sharply in 2021 and 2022, while a more recent increase in 2025 was driven largely by higher feeder animal costs. Following the Iran conflict, additional increases in nitrogen fertilizer and diesel prices pushed estimated corn breakeven prices even higher. Langemeier emphasized that high input costs remain the top concern among producers in the Ag Economy Barometer survey, consistently ranking above concerns about low commodity prices for both crop and livestock operations.
Langemeier also highlighted the impact of rising fertilizer costs, particularly anhydrous ammonia, which increased substantially over the previous year. Survey results from the Ag Economy Barometer showed that many corn producers expected the Iran conflict to raise their 2026 breakeven costs, with a significant share anticipating increases of 10% or more. When asked about the effect on farm income, roughly two-thirds of respondents expected a negative or very negative impact on their operations. To place current conditions in historical context, Langemeier reviewed trends in net farm income for a corn-soybean rotation in Indiana, noting that while strong commodity prices supported profitability in 2021 and 2022, margins have declined sharply as crop prices fell and input costs remained elevated. As a result, projected returns for 2024 through 2026 are lower than those experienced during the challenging period from 2014 to 2019.
Eric Belasco (Montana State University) – Affordability Under Pressure: Challenges Across the Food Supply Chain -- Cattle & Beef Prices
Eric Belasco examined the factors behind historically high cattle and beef prices across the supply chain. While input costs have increased for cattle producers, he noted that record-high cattle and beef prices have largely offset those concerns. Unlike pork and chicken prices, which have remained relatively flat or declined, beef prices have continued to rise. Belasco explained that one of the primary drivers is a constrained cattle supply resulting from persistent drought conditions across major cattle-producing regions since 2021. These droughts have limited producers’ ability to rebuild herd inventories, contributing to historically low cattle numbers. He also highlighted the biological realities of cattle production, noting that herd expansion takes time because of the long production cycle, creating what is commonly known as the cattle cycle.
Belasco discussed how different segments of the supply chain are responding to these supply constraints. Strong price signals are encouraging cow-calf producers to expand production, but the industry’s inherently slow response limits short-term growth. Meanwhile, feedlots and processors have adapted by increasing cattle weights, allowing more beef to be produced from fewer animals. Retailers have also increased beef imports, particularly from South America, to help meet consumer demand and stabilize supplies. Looking ahead, USDA projections suggest cattle prices may gradually decline over the next several years as production recovers, though ongoing pressures such as drought risk and competing land uses continue to challenge herd expansion. Belasco concluded that productivity gains, heavier cattle weights, and imports are helping maintain beef availability despite historically tight cattle supplies.
David L. Ortega (Michigan State University) – Affordability Under Pressure: Challenges Across the Food Supply Chain
Maria Kalaitzandonakes of the University of Illinois Urbana-Champaign discussed growing consumer demand for products with added protein. She explained that added protein products often include ingredients such as whey protein, pea protein, or soy protein added to foods including yogurt, pancake mix, snacks, and desserts. Kalaitzandonakes highlighted the tension between rising demand for protein and growing consumer interest in “natural” products with simpler ingredient lists. She noted that protein bars and protein shakes are often discussed within broader conversations about ultra-processed foods.
Kalaitzandonakes presented findings from consumer research examining willingness to pay for added protein products. The research found stronger consumer interest in protein-added yogurt products than pancake mix products and higher demand for added protein in sweeter, flavored versions of products. Additionally, she highlighted that consumer demand varied substantially across groups. She also noted that a minority of consumers have concerns about added proteins, including worries about ingredients and healthfulness. The presentation concluded that demand for added protein products varies significantly across products and consumer segments.
This program is supported in part by the Agricultural and Applied Economics Association.