AG Bull
Tommy Grisafi is the main host and content creator for Ag Bull Media.
The Ag Bull Podcast showcases agriculture's top talents in a long-form video format. The Ag Bull Trading Podcast is a deeper discussion of trading with analysts and key players in agriculture nationwide.
AG Bull
AEI.ag | When cheap money ends, strategy begins
We welcome agricultural economist David Widmar from AEI.ag to unpack why corn acres keep moving west, how the corn–soy “factory” expanded, and why interest cost is the creeper crushing margins. We break down median farm income myths, the scale of solar on farmland, and fresh headlines about a proposed $10B farm aid package.
• new collaboration with AEI.ag and how we met
• lessons from Escaping 1980 and boom-bust rhymes
• corn acres shifting west and state-level patterns
• price signals that favored corn over soybeans
• the expanded corn–soy acreage “factory” capacity
• rising “other” costs: interest, insurance, electricity, repairs
• difference between accounting and economic profit
• why median farm income reads demographics, not distress
• commercial producer concentration and debt service reality
• potential $10B aid: funding paths and dilution risk
• solar projects on farmland: fast growth, small national share
• practical risk management for higher-for-longer rates
“By the way, thank you for subscribing to the Ag Bull YouTube channel.”
“Also, if you would like a copy of these charts, just email us, TG at AG Bull.”
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Thank you, Tommy G
Happy Thursday, everyone. Tom Grossafi coming to you from Nashville, Tennessee. I hope you could hear me. I hope you could see me. And I am super excited to announce a new collaboration. That means we had to make a new thumbnail. We got a handsome alert here. Ring the bell if we have a bell right there. Mr. David Whidmer, new contributor here. He's coming to us from AEI.ag. David, there's a little backstory. Welcome to the show. Thank you so much, Tommy. Looking forward to this collaboration. I gotta switch us. I gotta be on the left. You've got to be on the right. All right. Tell everyone how I met you.
SPEAKER_01:Well, we crossed paths in Kansas City several years ago at the National Association of Farm Broadcasters. We followed up in Commodity Classic there afterwards. And we were talking about the Escaping 1980 podcast that my team put together. And it came together during the summer of 2020 when things weren't looking very good in the farm economy. Everyone was asking us, is this going to be a repeat of the 1980s farm financial crisis? That Mark Twain quote always rings true in our ears. History doesn't repeat itself, but it often rhymes. And of course, by the time we wrapped up that season of that podcast, this is the funny part. We went to the hell of a bull market. China started buying corn. We got some government payments. And that's that idea of the rhyming and the themes. There are always concerns, but there's always differences in the farm economy. And we tried to cover that in that 1980 episode. Everyone says, I my boss or my mentor or my dad told me don't repeat the mistakes of the 1980s, but very few people ever got sat down and really told what happened during the 1980s crisis. And we tried to do that in that podcast season.
SPEAKER_00:Right. And if folks, if you go to Spotify or Apple or however you get podcasts, and just Google Escaping 1980. Now, actually, David's being modest here because it's it's a three podcast series, and this is the first series, maybe 10 episodes. Is that correct?
SPEAKER_01:Yeah, yeah.
SPEAKER_00:And then the second season was Horn Saves America.
SPEAKER_01:So it was an idea of let's revisit the history of the ethanol boom and how it applied to the carbon market boom that was going on a couple years ago.
SPEAKER_00:Okay. My brother says he wants my speaker a little higher. Does that sound better, Jojo? All right, maybe I was whispering or something. All right, we sound good, we look good. I hope, I hope, I hope it's good. Otherwise, we'll have to redo everything. No. All right, and then the third series.
SPEAKER_01:Nothing borrowed, nothing gained. So looking through where does the money that farmers borrow come from? So we talked about the farm credit system, the local banks, the farmer Mac, and really help producers realize when the Fed makes a decision, how does that change in the Fed funds rate work its way through the system and eventually get its way to farmer level interest rates?
SPEAKER_00:And when that came out, were interest rates still at pretty much zero and about ready to explode, or were they just on the verge of exploding?
SPEAKER_01:It was right at that cusp where inflation was running and everyone was anticipating the Fed to start to raise their rates, and we were sort of priming the pump for people to think about how do we get from the Fed to the farm?
SPEAKER_00:It's interesting because I'd say half the problem people are in right now is because just money spent on interest. And although inflation was great for landowners and it was great for the initial explosion of crop prices, we then overproduced. Now our cost production is high, everything's high. You know what's high, and we could talk about it someday on another episode. But uh, electricity, insurance, those are the creepers, and then you know the way I always tell people on the interest is every million you were borrowing you used to pay 30 grand back. Every million you borrow now, you owe 70 or 80 grand. So you're there's a magic 40,000, 50,000 per million just gone, and it just cost you them business, correct?
SPEAKER_01:That that's completely correct. We just did a project, and we I didn't bring a slide for you today, but we were looking at the different cost categories that have gone up over the last few years, and there was this category we took out seed and fertilizer and crop protection, and then there's a other variable expenses, and it was up a lot, it was a huge surprise. It's repairs, it's interest, it's insurance, even crop insurance is up. So, yes, all these variable costs of production have really had a lot of upward pressure, and interest is the one that I think farmers have really got to focus on. And if you're not in a profitable situation today and you take on more debt to get through to next year, you're it's a spiral. You have to figure out a way to get your operation back to profitability. Be very cautious with just burning working capital to get yourself to next year.
SPEAKER_00:Yeah, and then just full disclosure, I'm Italian. If we don't ever have a slide, we got to talk with our hands and just do stick figures or something. So uh we're gonna get through. You did bring some great sites, but I was excited to start the show, and then I wasn't sure you know, Joe said our volume wasn't quite high enough, but we're rolling with it. Tell people what you do there at uh what work looks like for you on a daily level and why people subscribe to your group and and how you're helping farmers and businesses and ag lenders, etc.
SPEAKER_01:Yeah, so I'm an agricultural economist by training, so uh AEI is ag economic insights. We got really creative with our naming here. And my business partner, Brent Gloy, and I were both at Purdue University, and we recognized there was a gap between what the what media was able to report and what academia was able to report. And so there was this gap in the middle for substantive but still timely insights. And so we're not breaking news, we're not gonna be uh breaking the latest estimates for corner soybeans, but we're gonna break that down for what it means for for producers and for the supply chain, for agricultural professionals that work with producers. And so we spend a lot of time thinking about the farm economy, we spend a lot of time thinking about crop cropping decisions for 2026. And so we pull this all together to really help think about those farm level decisions and how producers and those who work with producers can best position themselves for whatever farm economy we're in. We spend a lot of so it's kind of like market commentary, but for farm management. We really try to drive this back down to the whole farm and risk management and decision making and capital purchases and debt service, all these things are really important to the operation.
SPEAKER_00:And all kidding aside, sometimes the best way to explain what's going on is with the picture. And I think you brought for your first time here at the Agbo Podcast, you brought a couple pictures. I'll uh pop those up. Let's add them to the stage here. Let's see this one. What do we have here? The old corn keeps moving west. What do you think of that?
SPEAKER_01:Well, we've been working, so we produce a lot of charts. So I'm gonna bring a lot of charts to this show. As many as Tommy will let me bring, he'll probably throw away a half of them. But just know the picture's worth a thousand words, pictures worth a thousand words AI.
SPEAKER_00:Go ahead, Mr. David. Some a lot of people will be listening to this and they won't be able to see it. So uh really obviously a lot of people watch us on YouTube. By the way, thank you for subscribing to the Ag Bull YouTube channel. But for folks listening on Apple and Spotify, we'll always do our best to try to describe what these charts say. Also, if you would like a copy of these charts, just email us, just get a hold of us, TG at AG Bull. I could send you these four charts. I just because sometimes I notice on uh TV when I do TV, people are like, you know, some of us are listening on XM Radio. I'm like, Oh, we threw up a picture and you have no clue what that is. And this picture is corn acreage keeps moving west.
SPEAKER_01:So, Tommy, thanks for that. What we've been watching is state level changes in corn acreage, and what was interesting is that acreage two years ago in 2023 was only 4 million acres less than where we are today. It's kind of hard to imagine I'm saying only 4 million acres difference. But the idea is we had a big corn year two years ago, we have a big corn year acreage year this year. So if corn acres are up roughly 4 million or 4%, we would anticipate that all the states would raise acres, or all the states would be about 4% higher. But that state level data shows that corn acreage keeps moving west. And how this shows up is the states that gained acres is basically the central plains, the northern plains, Iowa, Minnesota, Wisconsin. The states that didn't add acreage draw a line from Arkansas, Missouri, Illinois, and east. So Illinois, Indiana, Ohio, Kentucky, Tennessee, Michigan, these states just didn't add corn acreage. I think folks intuitively know that corn acreage has moved west over the last 10 or 15 years. They're surprised when they see it's still unfolding, even in this year when we have a record 98 million acres of corn, we still didn't add acres in that eastern corn belt.
SPEAKER_00:That's interesting. Were you surprised when the government kept upping corn acreage and upping corn acreage? Was your firm surprised?
SPEAKER_01:Yeah, we we have a model that we look at and it's not a survey, it's just looking at that price ratio. So one of the things I try to help our clients think about is how big is the US factory for making corn and soybeans, and we're gonna talk about that in the next slide. And then we look at that price ratio. So, how are we gonna allocate those acres between corn and soybeans? And so we our that model, it has a lot of noise to it, it's not a great model, but it was pointing to a bigger than 95, bigger than 96 million acre crop. Uh 98 is at the higher end of what it's was predicting. So I was surprised it hit that, but it was just signaling a big factory and it was signaling a share that was going to be very favorable for corn.
SPEAKER_00:And uh we did it, we did it. You know what else I heard, and maybe you could comment on this. Maybe I'm going off the rails and we're going sidetracking here, but the government made uh another level of crop insurance a little easier to buy up to that 95% level. And with the market so low, I think people bought up that better crop insurance, and it's like the like the government almost subsidized us planting more corn acres, and then the farmer was surprised they did it. So remember earlier in the all winter and all spring, how the market was saying plant corn, not beans, plant corn, not beans, and then when they did it, they're acting, they're acting shocked, like who the hell planted all this corn? Well, you guys did because the mass said to do it, but then you forgot to sell it. Is that correct?
SPEAKER_01:So corn had a very strong signal going into this year. The outlook was bleak for both corn and soybeans, but our budget estimates were saying corn had economic losses, and we could talk about the difference between an economic loss and an accounting loss, but an economic projection was like negative 10 to 20 bucks an acre before any government payments came in. Soybeans were hanging out like negative 100, negative 110. And so the signals were just blaring plant corn. And I think everyone got caught up in the narrative of it doesn't look great, and they missed the fact that corn was actually looking a little bit better than soybeans. And if we think about corn and soybeans together, which is what this slide is trying to look at, we also saw that corn and soybean acres collectively increase. So the first way we look at this is how many acres did we actually plant together? So we add those all up, and that came to about 179.8 million, so almost 180. The second thing we look at at AEI is we say, let's think about this as a factory. Sometimes a factory exceeds capacity, sometimes a factory comes under capacity, and there are reasons why. And in corno soybean acreage, it's that prevent plant factor. Sometimes prevent plaque is prevent plant is bigger than normal, sometimes it's less than normal. So what we did here said, what's that factory size? Because we know actual acreage, we know prevent plant. What's the factory size? And what we saw here is from 2019 to 2024, we planted on average 178 million acres of corn and soybeans. The factory size of 2025 was 180.3. So we added the factory expanded by 2 million acres, and I think that's gonna set the stage for big production going into 2026 and beyond. Where do those acres come from? It came from wheat, it came from cotton, and I don't see a crop budget outlook at this time that suggests wheat and cotton are gonna bid those acres back out of corn and soybeans. I think we're gonna lock it up.
SPEAKER_00:When I go on X, when I go on the interweb, I thought Dollar Trees and solar panels were taking all our land.
SPEAKER_01:Well, I have a slide for that. We could talk about that. The solar number uh is not quite big enough to pull a slide for everything.
SPEAKER_00:People will be like, I like that guy. If you got a problem, he's got a slide. Next slide. Medium farm income, not what it seems. Do tell.
SPEAKER_01:When the times get lean in the farm economy, I think folks are really struggling to find a measure to show how bad it is. And I've been seeing median farm income used a lot. And the headline goes something like the median farm income in 2025 is negative$300. And the insight is half more than half of all producers are losing money on their farming operation. Now that sounds sobering, but when you look at history, median farm income is almost always negative. In fact, 2025 is the fourth biggest or fourth highest, fourth best median farm income in decades. And so, what median farm income is really telling us is it tells us about the demographics of agriculture. And so there are a lot of producers, a lot of those two million farmers and ranchers out there that maybe have a lifestyle or a hobby operation. These are the farms that are included in the USDA statistics. And so what we see is year in and year out, there are demographics, and this one over here all the way to the left. These are residence producers. It's about half of all of the two million, so there's about a million individuals out there who have a farm and they have a job in town that's their primary focus, or maybe they're retired, they've retired off the farm. And so what we see here is that they have about a thousand dollars in losses on the farm every year, and they have an off-farm job to support that that that lifestyle or that that that project. You could think about this as you drive through rural America. Uh, a few goats, a few horses, a big acreage, and so sweet corn, a little something going on. This is not, and this is not this is not a for-profit, and they're trying to make it the the profitability of this farm, doesn't determine the profitability of their household. Their household is really what's driving and enabling that that farming side of it. And so then there's another category. These are these smaller operations, less than$300,000 in gross farm sales. They're focused on their farm, but there's a lot of off-farm income helping them as well. So on average, they have a profitability, but it's a pretty small profit. They're reinvesting that profit to grow that operation for the future. And then finally, that's that 10% of commercial producers, they have a lot of on-farm income. They also have off-farm income. And I think the other thing I'll mention here is that that on-farm income looks like a big number, but in reality, they still have to pay their debts. They have to service their debts with that number. So that isn't free and clear cash. They also have to pay their household expenses out of that number. And so farm profitability is always tricky because there's a lot of things going on with that, but demographics are really key to keep in mind if you think about what happens. So there are a lot of producers out there where this downturn in the farm economy is negatively impacting their households, but there's a whole other tranche of the farm economy that's more dependent on their jobs in town.
SPEAKER_00:Okay. And uh I think we got a little breaking news here coming out, too. My brother's saying, let's go to the next slide real quick, he'll get that loaded up. Next slide here, survey says, is uh solar projects on farmland and non-farmland. I want to go back though, I'm gonna go back one slide and ask you a question.
SPEAKER_01:Go for it.
SPEAKER_00:If Tommy Grassaffee and Joe Grassoffi, who are commodity brokers at Agble Trading, and we go through Nesvik trading here in Nashville and Memphis, and uh a great client is someone who grows 200,000 bushels of corn and 50,000 beans. How many of those farms are there? It's not as many as we think, is there?
SPEAKER_01:No, so it's that 10 that is all the way over to the right. That's where that group would be at. But let's back that up. That 10% to the right is actually anybody with more than$300,000 in economic activity. And so you think there are two million farmers roughly, and then 10% of those have more than$300,000 in economic activity. And so that segment that you just talked about, right? That's any close to that million plus, that's going to be even a smaller share of that. So we're talking about tens of thousands of producers, not hundreds of thousands, which is where we see a lot of these demographic shifts coming from.
SPEAKER_00:All right. I think we got something exciting happen that doesn't always happen, but you know what we have? Breaking news, breaking news. We can't make this stuff up. All right, Jojo loaded it up and he says, go ahead, Joe. Trump plans billions for farmers with taxpayer money. Politico Trump explores bailout, at least 10 billion for U.S. farmers. I saw that uh come across X2 while uh we were talking, and uh this is being recorded at 2 30 on uh 10 to 2025. I gotta tell you something, and then I'll let you talk. 10 billion isn't a lot of money for how much damage there is out there financially. I know 10 billion sounds like a lot, but if you take 10 billion dollars, well, think of it this way we grow 16 billion bushels of corn, and if you gave them a dollar a bushel, that's 16 billion, right? We grow four, four and a half, five billion bushels of beans, that's only two dollars a bushel in beans. My clients in North Dakota have a dollar seventy-five negative basis, they need someone just to make up that dollar 75 to get close to break-even. So, anyway, we can keep politics out of it, but someone's you know, the flying around on Air Force One and flying around on a combine are two different things here because there's still a big gap in finance and ag, correct?
SPEAKER_01:Right. I don't think$10 billion is uh it's it's on the lower side of what I was expecting.
SPEAKER_00:Say something crazy, we'll get all types of comments on YouTube.
SPEAKER_01:They'll be like, That guy, he's arrogant.
SPEAKER_00:David doesn't think$10 billion is a lot. We're folks, we're talking about$10 billion over all the bushels of corn, all the bushels of wheat, all the bushels of uh soybeans, canola, edibles, there's sunflowers, all that stuff, like uh sugar beet, should price of sugar is horrible. There's a lot of problems out there, David. Seriously.
SPEAKER_01:I think that you hit the nail on the head. It's how much slicing of a$10 billion pie are we going to do to get there? So if we're talking about$10 billion to corn and soybeans and wheat, that might be start getting there. But if we have to slice that up with livestock producers and all these other crops that they're gonna be needing and wanting these payments as well, I think that's gonna start to be relevant. I think what we're gonna have to figure out here in the next few months here is how they're gonna pay for this. So I think the CCC credit card is about tapped out. Uh, I don't think there's$10 billion on that. I think it's a$15 billion max to begin with. And so I think the next thing is are they gonna be able to use tariffs? And I don't know how that tariff, the tariff revenue is gonna play into that. And then the third arm here might be Congress, and Congress is is apparently tied up for the next couple days at least with some some work, some homework they haven't gotten accomplished yet. And so we'll see if they get the government back open. But I think 10 billion is small enough that they can probably wiggle it through with some non-congressional action, so maybe that's the motivation for that smaller number. But I think it was a$30 billion pro$30 billion in funds that Congress authorized at the end of 2024 that got paid in 2025. So that's just some context of why I said$10 billion isn't as much as I would have anticipated.
SPEAKER_00:You know how you have a slide for everything? I got a slide for everything. This is where the money comes from, right here. The old swipe the card,$10 billion. We're talking about. Well, we're recording our first podcast ever with Mr. David, and uh, we had some breaking news here about$10 billion. It it nonetheless, uh, it's interesting.
SPEAKER_01:Okay, as we it's a long ways from the producer's checkbooks, though. It's a long ways away from their cash flow statements, and so I think the government's closed right now, too.
SPEAKER_00:That's funny in itself. That uh we're like, hey, we got money for you. Let's go over this next slide. And I do have I did lose one client over here up in Michigan to solar farms. He's a really cool kid. Again, we're meeting with uh David from AEI.ag. That is the website, correct? That is, yeah. We have it plastered everywhere. If they don't know what it is after this episode, they're a fool. Explain to me the solar farm thing.
SPEAKER_01:Well, we've been getting a lot of folks, just like you mentioned here, saying, Hey, I don't have as many acres as I did last year because I lost out my lease to a solar lease, or I drive down the interstate I-70, I-80, I-9, and I see a solar farm going in, and it's really big. And what's gonna happen? What's gonna happen with all this farmland? So we step back. I think we're the first team to ever do this, and we measured how many acres of farmland have been converted to solar projects on the map. If you can see that, those are the green dots. The blue dots are non-farmland, so that's you know, desert or commercial space or the top of a building. These are these are utility scale projects, and it's interesting to see how this plays out. If you were to roll this back, and we have one of these images at our site, aei.ag, where it time-laps over time. And so if you looked at this before 2020, there weren't many dots, there weren't many projects in what I'd call the Corn Belt or the Great Plains, and that's where so we look at this now, and we had an explosion of activity there, it's in the heartland, and also in Florida and Texas. That's where we really saw a lot of these new projects come online. So the number, 300,000 acres of farmland, 650,000 acres in total, have been covered by these large-scale solar projects.
SPEAKER_00:All right, I like this. I gotta say, of all the people I do shows with and whatnot, you're different, which is unique. And like any mom would say, they're just jealous, yeah. Because you bring a different uh, and we're not 36,000 foot view, we're even higher than that. You're not nothing we talk about definitely on our shows uh with you is gonna make someone do a trade or maybe influence them for the day. But it I'll just speak for myself. Listening to your podcast, you and your group's podcast, changed the way I was thinking about. And even though we teased you in the beginning that your podcast did started when prices were exploding, and it seemed very off. It seemed like, wow, we got a bunch of professors who aren't with the times. Things repeat themselves, history repeats themselves. People we we get too cranked up in the egg, and then decisions made during good times come back to haunt you during bad times, and I think that's where we are right now. Is that correct?
SPEAKER_01:Exactly the case. And the rhyme that we were concerned about surfacing in 2020, and we talked about this, is inflation followed by interest rates. And I think that's this problem that we found ourselves in, and hopefully we're through it, right? But in the 70s, there was a bout of inflation, and then there was the Paul Volcker 1980, 19 late 70s, early 80s inflation hike to, or excuse me, interest rate hike to calm and curb inflation. And I think that's the part that we're concerned about. And I think that's still the piece that a lot of producers haven't fully thought through. Where do you think interest rates are gonna be five years from now? And we're not going back to that 2010 to 2022 era of almost 0% interest rates, in my opinion. I think we're gonna see interest rates at a higher level, not necessarily where we are today, but higher than where we've been in that rear view mirror look at perspective. We leaving the 2010 era of 0% interest rates had a lot of distortion in the in the economy and the farm economy. And I think we're still unraveling and unwinding from that.
SPEAKER_00:Not to mention, David, what happened with if that wasn't odd enough what we were doing when you throw in COVID, the COVID mathematics of uh taking our deficit from you know back then 16, 18 trillion to 24 trillion, and now we're in the 30 trillion. That it seems like, and we'll talk about this on another episode, but I guarantee you could overlay the United States deficit of what it is in the value of farmland, couldn't you?
SPEAKER_01:That's a good question. I'll have to I'll have to think about bringing a chart next time. I'll have to put that together. That's a really good point.
SPEAKER_00:We're meeting today with this handsome gentleman right here, Mr. David Whidmer. He's a new contributor through with AEI.ag. I met David through the interweb, just like you're all meeting us on this podcast, and their podcast they had, it I don't know what to say changed my life. Like, wasn't like I had a drinking problem, and this podcast sobered me up, but this podcast challenged me to think. And now I promise you, I promise you, on October 2nd, 2025, if you go listen to this podcast, it all makes sense. But when I was walking on a treadmill three, four years ago listening to this podcast, I was like, what are these guys smoking? Grains are six, seven dollars for corn, farmers are profitable, they're paying a hundred thousand dollars over list for machinery. This doesn't make sense. It all makes sense now by far the number one podcast you could listen to in agriculture, better than this one, because I don't think people realize how much time and work you guys put into that podcast series. Is that correct?
SPEAKER_01:It took us a team to put together. I appreciate you you your your endorsement. I also appreciate you recognizing that um there's a lot of editing and a lot of planning that went into that. So it's a very different format. It's it's well done. We had a great producer and co-host help us put that together. So we're really proud of that output. And we tried to bring themes and lessons that would resonate for decades, and then that was what we were trying to really accomplish there. And I and I hope that that plays out. But as you said earlier, Tommy, it's often the decisions we make in the good times, in the boom years, that get us into trouble and not those bad years, those linear decisions. We're usually trying to just get out of that hole by the time we get there.
SPEAKER_00:Yeah, absolutely. Well, I'm glad to call you a friend and a contributor. I know we talked about doing this a few years ago, we just couldn't get it done. Timing wasn't right. Timing's right now, and people need you and your group and Agbo Podcast in this you know collaboration, what we're gonna do. And not so sure how often everyone's gonna see you guys, if it'll be every week, every other week, but we'll take you as much time and as often as you guys want to do this, we'd love to have you. All right.
SPEAKER_01:Well, thanks so much, Tommy. Appreciate all you do.
SPEAKER_00:And I am not gonna spend a lot of time editing this. I'm gonna box it up, and this is gonna be on the interweb in the next half hour. But it will be up to date with breaking news. Thanks, my friend. Thank you.
