The partial shutdown of the U.S. government began on Oct. 1, and was entering its third week on Oct. 22, with no indications regarding how long that shutdown may last.

Most farmers in the Midwest have been in the middle of harvest season in recent weeks, so there has probably not been a lot of attention paid to the shutdown to this point. However, as the shutdown continues into the latter portions of the year, it will likely start to impact financial decisions for farmers and ag lenders. Most local FSA offices were closed on Oct. 1 and will likely remain closed until the shutdown ends. Since 1976, there have been 21 shutdowns of the federal government, though most have been quite short; however, the 2025 shutdown is now one of the longest in history. The longest government shutdown was in late 2018 and early 2019, and lasted 34 days.

Following action on Tuesday, Oct. 21, the White House and USDA were working to reopen FSA offices for several days each week, even as the shutdown continued.

Most of the federal government services through USDA that are administered through the Farm Service Agency, the Natural Resource Conservation Service, and the Risk Management Agency have been discontinued while the government shutdown is in effect. The shutdown also impacts programs and the release of funding through USDA Rural Development and other USDA agencies. In addition, the government shutdown has delayed or canceled important reports that are regularly released by the National Agriculture Statistics Service and the Economic Research Service.

Farm operators in many portions of Minnesota, as well as in some adjoining counties in northern Iowa and eastern South Dakota were expecting to receive 2024 Ag Risk Coverage farm program payments in October. The ARC-CO payments are being paid to offset low commodity prices and poor corn and soybean yields in 2024. Farmers in several southern and central Minnesota counties are expecting 2024 ARC-CO payments of $70-$80 per corn base acre and $40-$50 per soybean base acre.

Release of ARC-CO payments is in question during the duration of the federal government shutdown; however, the payments are guaranteed and will be paid at some point. The shutdown is also delaying the annual rental payments for the Conservation Reserve Program that are typically sent out during October. Farmers who are waiting for approval of 2023 and 2024 disaster assistance payments or other government payments are also seeing delays in those payments during the shutdown.

The government shutdown also means that producers will not be able to take out Commodity Credit Corporation marketing assistance loans at local FSA offices unless those offices are reopened. Those are 9-month loans that would be taken out by a farmer after harvest on 2025 grain production that is in storage. The loans allow crop producers to receive partial value for their grain following harvest for cash flow purposes, while maintaining marketing flexibility into the following spring or summer. This is especially important in a year such as 2025, when farmers are facing very low corn and soybean prices and quite wide basis levels in many areas of the Midwest. Many farm operators would likely utilize these loans for short-term financing after harvest to finish paying any remaining 2025 crop expenses, second-half land rental payments, and the pay year-end real estate and term loan payments. They could also be used for payment of prepaid crop input costs for 2026.

Many ag lenders utilize FSA direct and guaranteed loans as financial tools for providing financing to farm operations. FSA loan guarantees become extremely important during periods of reduced farm income and low profit margins in crop farming, such as currently exist in many areas. Farmers with existing FSA operating loans may not be able to access the loan funds to pay ongoing farm expenses.

The government shutdown will likely slow the FSA loan approval process, and if the shutdown continues, it could result in difficulties for some farm operators being able to finalize their 2026 farm operating loans on a timely basis. The FSA direct loans are especially important to younger farmers and those with less than 10 years of experience, who may have difficulty getting financing through traditional lenders. The direct loans typically provide longer-term loans at lower interest rates to producers for land purchases and other capital improvements. An extended shutdown could delay the FSA loan approval process to a point where some farmers might miss out on a land purchase opportunity.

Farm operators who are facing financial challenges due to the government shutdown should consult their local ag lender and discuss short-term solutions until the shutdown ends. For example, if farmers have 2025 corn or soybeans that they planned to put under a marketing assistance loan at the FSA office for cash flow purposes, they may be able to get a short-term "bridge loan" through their local lender. Most lenders are willing to work with farmers on temporary cash flow needs, provided that there is adequate collateral to secure a loan. Ag lenders can also be a very good resource for strategies to deal with very tight cash flow budgets at year-end.

The federal government shutdown has eliminated the USDA weekly crop reports, the October monthly crop report, and the October supply and demand report. The National Agricultural Statistics Service's October crop report was widely anticipated, as many farmers and marketing analysts were wondering if the USDA would lower the estimated 2025 corn and soybean yields, which could help improve the current low market prices. The monthly World Agricultural Supply and Demand Estimates report, scheduled to be released on October 9, was also eliminated. The WASDE reports include updated grain usage and export estimates for U.S. grain supplies, as well as projections for farm-level grain prices for the current marketing year. These reports can be very useful to crop producers, livestock producers, processors, and others.

Potential 2025 crop insurance payments

Corn and soybean yields in many portions in the Midwest have been good-to-excellent in 2025; however, there are areas that had below average yields due to weather, diseases, or other issues, which may qualify for 2025 crop insurance indemnity payments. Farmers that utilized "optional units" for their 2025 crop insurance coverage may have individual farm units with yield losses, even if overall yields are strong. "Optional units" allow producers to insure crops separately in each township section, as opposed to "enterprise units" for their crop insurance coverage, which combines all acres of a crop in a given county into one crop insurance unit.

One simple method to estimate potential crop insurance payments is to calculate the estimated 2025 "threshold yield" for crop insurance payments to begin for corn and soybeans with Revenue Protection crop insurance policies. If the final farm yield is lower than the "threshold yield," there is potential for 2025 crop insurance indemnity payments, depending on the final harvest price for corn or soybeans.

Here is the formula to calculate the "threshold yield" for potential gross insurance indemnity payment:

• Multiply the APH yield on a farm unit times the crop insurance spring price times the crop insurance coverage level to get the crop insurance guarantee. (The spring prices were $4.70 per bushel for corn and $10.54 per bushel for soybeans.)
• Divide crop insurance guarantee by the estimated fall harvest price to arrive at the "threshold yield" where RP crop insurance payments are initiated.
• The estimated payment equals the "threshold yield minus the actual 2025 yield times the harvest price.

(The harvest prices as of October 21 were $4.18/bu. for corn and $10.16/Bu. for soybeans.)

Producers who have potential crop revenue losses in 2025 should contact their crop insurance agent to find out about documentation requirements for crop losses and to make accurate crop insurance payment estimates.