Costs are outrunning prices. Which break-even are you using?

By the Thombar team

tl;dr: 87% of specialty crop growers in a new industry survey say their operating costs are rising faster than their crop prices. Most growers carry a break-even number in their heads, but there are really four of them, and the one you use decides whether next year’s contract, pack-out or planting plan actually makes you money. Before you talk price with a buyer or renew your line this winter, know which one you are looking at.

What happened

Three things landed this September, and together they say the same thing.

First, on September 24, The Packer published results from its 2026 Sustainability Insights report. 87% of specialty crop growers agreed that operating costs are rising faster than crop prices (45% strongly, 42% somewhat). 82% said it is getting harder to pass labor cost increases on to buyers. The top financial pressures growers named were labor (55%), energy and fuel (53%) and fertilizer and chemicals (51%). A Washington apple and hop grower told the paper that “the margins get squeezed or some years disappear entirely.” A Southern California citrus and avocado grower put it more bluntly: “For lemons, we’re losing 12 cents for every dollar that comes in.”

Second, on September 17, the International Fresh Produce Association asked Congress for $5 billion in support for specialty crop growers, and asked that any help be based on actual sales losses rather than acreage. IFPA’s Alexis Taylor told the House Agriculture Committee that “input, regulatory, and labor costs have all risen sharply, while farm returns have not kept pace.” Nothing has been approved, so it is not something to plan cash around. But note the design: if aid ever comes, it may be paid on documented losses, not on acres.

Third, USDA’s September farm income update, as summarized by the American Farm Bureau Federation, put 2026 farm production expenses at $492.8 billion, up 4.5% from 2025. Fuel and oil costs are forecast up 28.8% and fertilizer, lime and soil conditioner up 15.3%. On the revenue side, fruit and nut receipts are expected to slip 0.4% to $34.7 billion. Vegetable and melon receipts are projected up 15% to $28.8 billion, so this is not the same story for every crop. And total farm debt is forecast at a record $605.1 billion, up 4.6%.

Why it matters to your P&L and your cash

When costs and prices move in the same direction, a rough break-even is good enough. When they split apart, rough gets expensive. The question stops being “did we make money last year?” and becomes “at what price, on which block, does this crop stop paying for itself?”

Here is the part that is easy to gloss over: there is not one break-even. Washington State University’s 2024 Honeycrisp cost study lays it out clearly with four levels, each one adding a layer of cost:

Break-even level (WSU 2024 Honeycrisp, angled V)	What it covers	Per bin
1. Variable	Materials, labor, chemicals and other operating inputs	$624
2. Cash	Adds fixed cash costs like property tax and insurance	$641
3. With depreciation	Adds wear on trellis, equipment and buildings	$673
4. Full cost	Adds interest on your own capital and a salary for your management	$867

The study’s own baseline price assumption is $660 per bin at full production. Run that against the four levels (calculated from the study’s own numbers, as an illustration, not a forecast for any orchard):

• Against the variable break-even, $660 looks fine: $36 a bin ahead, or about $2,100 an acre at the study’s full-production yield of 58.32 bins.
• Against the cash break-even, still positive: $19 a bin, about $1,108 an acre.
• Add depreciation and it flips: $13 a bin behind, about $758 an acre.
• Against full cost, the orchard is $207 a bin short, about $12,072 an acre. Full cost sits 31.4% above that price.

Same orchard, same price, four different answers. WSU’s authors reach the blunt conclusion that “none of the gross yield and price combinations in either trellis system would result in positive net returns for the owner-operator” under their assumptions. And those are 2024 costs, before this year’s fuel and fertilizer increases.

This is how a farm can pay every bill on time for years and still be quietly eating its own equity. The cash break-even says you are fine. The full-cost break-even says you are replanting, reinvesting and paying yourself with money the crop is not earning.

Things to check this week:

• Which number is in your head? Write down the break-even you have been quoting. Then write which of the four levels it really is.
• Your cost per unit, not per acre. Per-acre cost hides yield. Divide each block’s costs by what it actually packed or delivered, in the unit you get paid in (bin, carton, pound, ton).
• Fuel and fertilizer, at this year’s prices. If your budget still uses last season’s diesel and fertilizer, update those two lines first. They are the ones that moved most.
• Net price, not gross. Compare your break-even to what actually reaches your account after packing, marketing and other deductions, not to the headline price.
• Your worst block. Averages protect weak blocks. Find the one where cost per unit is highest and ask whether it clears even the cash break-even.

The bigger picture

Put together, these signals point one way for the next one to three seasons: growers who can prove their numbers will have an edge, and not only in their own planning.

Buyers will push back harder. When 82% of growers say it is getting harder to pass labor costs through, the grower who walks in with cost per carton by block, and a clear line between what is covered and what is not, is having a different conversation than the one who says “costs are up.”

Lenders may ask for more. With farm debt at a record and interest expense rising, expect more questions at renewal about margin by crop, not only the balance sheet. Knowing what the farm spent is not the same as knowing what each bin, box or ton cost to grow, and that gap is where the hard questions tend to land.

Policy may reward documentation. IFPA’s request ties support to actual sales losses. Whether or not that passes, the direction is clear: the growers with clean, unit-level records will be the ones who can show what happened to them.

Not every crop is squeezed the same way. The USDA forecast has vegetable and melon receipts up while fruit and nut receipts slip. That is exactly why a national average is not your number, and why the break-even has to be yours, by crop and by block.

How to check your own exposure

Doing it yourself. You can build all four break-evens with a spreadsheet and an afternoon:

1. Pull last season’s costs from your books and sort them into four buckets: variable (inputs, labor, fuel, custom work), fixed cash (property tax, insurance, office overhead, interest you pay), depreciation, and the non-cash items (a fair salary for you and a return on the land and equipment you own).
2. Split them by crop and, where you can, by block. Labor and harvest costs usually split cleanly from crew records. Overhead can be split by acre.
3. Divide each bucket by the units you actually sold from that block. Stack them up: that is your four-level ladder.
4. Put your net price next to it, after deductions. Mark which rung it clears.
5. Sanity-check against a public benchmark. UC Davis Cost and Return Studies, WSU Crop Enterprise Budgets and UF/IFAS production cost reports cover many specialty crops and show every assumption, so you can see where your farm is different.

The hard part is not the math. It is keeping it current while diesel, fertilizer and labor keep moving, and splitting shared costs fairly by block.

Where Thombar helps. This is the job Thombar is built for. It connects to QuickBooks, or takes Famous, DataTech and spreadsheet uploads, tracks cost of production by crop and by block, watches diesel, fertilizer and packaging costs with alerts when a trend threatens your margin, and puts live USDA shipping point prices next to your contract. When it is time to negotiate, it can package those numbers for the conversation with your buyer. It does not replace your bookkeeper or CPA; it gives you and them the same, current picture.

When the squeeze hits your cash. A tight margin usually shows up in the checking account before it shows up on the P&L: the fertilizer or packaging bill is due now, and the settlement pays later. Your bank should be your first call. But if you have already used up your bank line, or your bank can’t move fast enough for a bill that’s due this week, that is the specific gap Thombar Capital is built for. It is a revolving agricultural line of credit with a decision in 24 to 48 hours, one flat fee per draw that you know before you draw, and only a soft credit pull. It finances approved supplier purchases only and is subject to credit approval; amounts, terms and eligibility vary. More on how it works is in this earlier post on Thombar Capital.

This post is for general information only and is not financial, legal or tax advice. The WSU figures are the study’s published estimates and assumptions, not a prediction for any farm. Talk to your CPA or lender about your own operation. Thombar Capital is powered by Kanmon Inc., California DFPI Finance Lenders Law License #60DBO-144925.

Sources

• The Packer: Soaring Operating Costs Threaten Survival of Specialty Crop Growers (Sept. 24, 2026)
• RFD-TV: Specialty Crop Growers Call for $5 Billion in Aid (Sept. 17, 2026)
• AFBF Market Intel: USDA Revises Farm Income Higher, but Costs Still Bite (Sept. 3, 2026)
• WSU Extension TB106E: 2024 Cost and Return Estimates of Establishing, Producing, and Packing Honeycrisp Apples in Washington (Gallardo, Galinato, Sallato)
• WSU Crop Enterprise Budgets
• UC Davis Cost and Return Studies
• UF/IFAS EDIS FE1013: Florida Strawberry Production Costs and Trends