US food industry faces a stormy 2026: growers and retailers brace for economic and policy shocks
The food industry is staring down a tough 2026. Capstone, a global analyst firm, warns that US agriculture faces a storm of tighter margins, unpredictable demand, and policy obstacles. Growers and grocers alike will wrestle with slumping crop prices, soaring input costs, and relentless trade uncertainty.
In 2026, row crop growers are set to feel the squeeze even more, as Capstone projects that sagging commodity prices will collide with rising costs for labor, machinery, fertilizer, and energy.
Although most growers reported higher yields this past year due to efforts to improve productivity, Capstone notes that “many of them are concerned that, given the economic and political unpredictability of President Trump’s second term, their operations will not make money.”
Labor is US growers’ leading headache
Labor, the company predicts, will be one of the main industry stressors due to President Trump’s ICE crackdown on undocumented communities.
According to immigration non-profit The Forum, there were 1.2 million undocumented farmworkers living and working in the country in 2021, making up as much as 70 percent of America’s total farmworker workforce.
The Trump Administration has so far deported more than half a million people, and the agricultural industry felt the decrease in hands.
Despite the president recognizing growers’ suffering, which led to the alteration of the H-2A visa program in October to combat labor shortages, Capstone says the industry should still expect issues to continue into 2026 as immigrants “wait for their chance to return to work.”
Cost pressures pile up
Farm equipment is piling on the pressure, too. Growers have already weathered a staggering 25 percent price hike in just three years, and Capstone sees no relief on the horizon.
To cope with soaring expenses, the industry is cutting back on equipment purchases, which has led to John Deere, the iconic American machinery maker, posting bigger-than-expected losses, slashing production, and laying off workers this past year.
CNH, another leading machinery manufacturer, announced plans to close its Burlington, Iowa, tractor plant by the second quarter of 2026.
Capping off the challenges, fertilizer prices are set to take another hit. Capstone warns that trade volatility will drive up costs, as most raw materials for phosphate and nitrogen fertilizers are imported.
Retailers’ pockets will suffer too, says Capstone
The retail industry is not immune to the crisis. Capstone’s report warns that the Trump Administration’s drive to cut Supplemental Nutrition Assistance Program (SNAP) spending will hit grocery stores and food manufacturers hard, especially those who depend on SNAP dollars to stay afloat.
A key restriction is the expanded work requirement, which now mandates most adults aged 18 to 64 to complete at least 80 hours per month of work, volunteering, or job training. Previously, this threshold applied only to adults aged 18 to 54.
Also, all work exemptions have been removed. So, veterans, people experiencing homelessness, and former foster youth are now subject to the work requirements.
Capstone identifies two additional concerns for grocers: state food restriction waivers that prohibit SNAP benefits from being used for non-nutritious items such as candy and soda, and reduced SNAP participation due to reforms to broad-based categorical eligibility (BBCE).
Under BBCE, households that receive benefits from the federal Temporary Assistance for Needy Families (TANF) program are “categorically eligible” for SNAP without having to meet SNAP’s income or asset tests, which the company says the Trump Administration views as a workaround that allows states to expand SNAP coverage beyond what Congress intended.
*All images are referential.
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