Drought, fuel costs and farm bill delays stack three fresh pressures on U.S. producers as 2025 fieldwork gets underway, according to a KSJD report out of Cortez, Colorado that flagged compounding weather, energy and policy headwinds for the Four Corners region and beyond.

The report highlights how each pressure magnifies the next. Dry soils push irrigation pumping. Diesel pushes harvest bills. And a stalled farm bill leaves safety net formulas stuck on 2018 reference prices.

How deep is the drought?

The U.S. Drought Monitor's late-2024 map showed moderate-to-exceptional drought (D2-D4) blanketing more than 40% of the lower 48 states at peak. The Four Corners region, KSJD's coverage area, sat in the bullseye for much of 2024, with ranchers culling herds and farmers fallowing ground that lacked irrigation water. Dry conditions typically translate into higher pumping costs, lower yields and reduced residual soil moisture heading into the next planting window.

What does fuel cost do to a margin sheet?

On-farm diesel averaged roughly $3.50 per gallon in early 2025 across many Plains states, off the 2022 peak near $5.00 but still well above the $2.50-$2.80 range farmers paid from 2018 through 2020. Every $0.50 bump in diesel adds an estimated $8-$12 per acre to harvest and tillage costs on a typical dryland operation, depending on tractor horsepower and field passes. Multiply that across a 2,000-acre farm and the line item reaches five figures fast.

Why does the farm bill delay matter?

The 2018 Farm Bill expired September 30, 2024. Congress has run stopgap extensions since. Without a new bill or a clean reauthorization, statutory reference prices for Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) remain frozen at 2014-era levels — far below current cost of production for most row crops. The House Agriculture Committee and Senate Ag panel have traded markup drafts, but conference negotiations have not produced a conference report as of early 2025. That leaves producers and their lenders staring at the same PLC and ARC math they ran for the 2024 crop year.

What does this change for a working farm?

Cash margins tighten. A corn grower with a 180-bushel APH and a $4.50 PLC reference price collects little from the 2024 payment formula once the effective price sits near $4.20-$4.40 in many Midwest counties. Drought insurance indemnities from the same counties are arriving slower than usual, and APH databases will reflect reduced 2024 yields, dragging down the guarantee base for 2025. Fuel hedging contracts signed at 2024 peaks now look expensive; those that weren't signed now look cheap.

The compounding effect is what the KSJD report captures: each pressure is manageable in isolation, but together they compress working capital, slow equipment trades and force tighter operating lines at the bank.

What's the forward signal?

Three data points will tell the next chapter. The January 2025 WASDE will reset U.S. and global ending stocks. The next Drought Monitor release will show whether winter precipitation closed the Four Corners deficit. And the next farm bill markup from either chamber will reveal whether Congress is willing to lift PLC reference prices above the $3.70 corn and $8.40 soybean levels that have anchored the 2014 farm bill. Until those move, producers are running 2025 plans against a 2014 safety net in 2025 weather.