As 2025 begins, the agriculture industry faces a mix of opportunities and challenges, highlighting the importance of preparation and adaptability. GreenStone executives Paul Anderson, executive VP and chief credit officer, and Ian McGonigal, executive VP and chief sales & marketing officer, shared their insights on the economic outlook for Michigan and Wisconsin farmers. Despite tightening margins and market uncertainties, GreenStone remains steadfast in its mission to support its members.
Big Picture: A Period of Correction and Opportunity
Paul Anderson emphasized the cyclical nature of agriculture economics. The industry is entering a correction phase, similar to the one experienced from 2015 to 2019.
“We’re entering the second year of what we believe will be a four-to-five-year correction cycle in total,” Anderson said. “Margins are tightening, and while some customers faced losses in 2023, we expect more experienced challenges in 2024 and beyond.”
Despite these hurdles, Anderson views this period as an opportunity to strengthen relationships with customers and help them navigate challenges. “This is where we prove our value as a relationship-based lender,” he said. “We’re here to partner with our customers and help guide their decision-making process when requested by providing them with financial options that balance the needs of their specific situation with the whole of the GreenStone cooperative membership.
For customers feeling the financial pinch, Anderson urged proactive communication. “If you see things tightening, don’t wait—reach out to your loan officer today,” he advised. “The earlier we start the conversation, the more options we can explore together.”
Industry Focus: Dairy and Grain Producers
Ian McGonigal highlighted two key industries in GreenStone’s territory: dairy farms and cash crop operations. Both sectors have unique dynamics heading into 2025.
Dairy Outlook:
McGonigal shared many dairy farms are positioned to perform above average financially in 2025, supported by an abundant and relatively inexpensive feed supply.
“This year’s harvest in Michigan and Wisconsin has been excellent, resulting in plentiful and affordable feed,” he said. “That’s a significant driver of profitability for dairy producers.”
Also adding to dairy producers’ bottom line is the high value of beef, which is incentivizing dairies to sell more beef. This has reduced the number of replacement heifers and made herd expansion costly.
Cash Crop Outlook:
The picture is more challenging for cash crop producers. “Corn, soybean, and wheat prices have been on a downward trend due to record yields in 2024 and a large carryover from 2023,” McGonigal said. “This surplus will likely keep prices low throughout 2025, making profitability harder to achieve.”
The silver lining, he added, lies in the strong financial positions of many cash crop producers, due to strong prices and profits until a year or two ago.
“Many operations also have substantial equity in farm real estate and other assets, which can often provide working capital to weather the storm,” McGonigal said. “The key is to run lean and keep costs as low as possible until markets rebound.”
Other Trends and Insights
GreenStone also serves a diverse range of customers beyond traditional farming, including rural landowners and part-time farmers. McGonigal pointed to strong demand for home construction loans as rural residents face a persistently tight housing market and opt to build their own homes due to limited homes on the market for sale.
Interest rates remain a wildcard for 2025.
“We’ve seen some decreases recently, but there’s no certainty about what the Federal Reserve will do next,” McGonigal said. “Rates will be on our customers’ minds in the coming year.”
Additionally, advancements in crop insurance products could provide much-needed support for farmers. “New products have made crop insurance more affordable and offer better coverage,” McGonigal said.
GreenStone’s Commitment to Resilience
Both Anderson and McGonigal emphasized GreenStone’s commitment to supporting its members through economic cycles. The cooperative is prepared to draw on its experience from previous downturns to mentor newer staff and help customers make informed decisions.
“We partner with the 1% of the population that feeds the world, and that responsibility will never go out of style,” Anderson said. “Our success is tied to the success of our customers, and we’re here to help them refine their management, improve operations and emerge stronger.”
As the agricultural industry prepares for another year of challenges, GreenStone stands ready to provide the guidance, resources and financial solutions its members need to thrive.
This blog was originally published in Michigan Farm News.
