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Find out if drought could impact your farm this year, and get eight tips to help protect your profitability during drought conditions.
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Drought events cost an average $9 billion a year, so it’s critical to know how to mitigate the potential risks to your ag operation.
According to National Integrated Drought Information System (NIDIS), as of April 8, 2025:
32% of the United States is experiencing drought this week
166.2 million acres of crops across the country are experiencing drought conditions this week
98.3 million people in the United States are impacted by drought this week
42 U.S. states are experiencing Moderate Drought or even worse this week
“Forecasters predict above-average temperatures for the East and Gulf Coast regions, while drought conditions continue in the Southwest,” reports The National Oceanic and Atmospheric Administration (NOAA), which issued its 2025 U.S. Spring Outlook on March 20. Even U.S. locations that had exceptionally cold temperatures and “usual snowfall” this winter are expected to experience above-average temperatures.
Drought will lead to more than $139 billion in financial losses in Canada over the next 30 years. According to the AAFC, 37% of Canada’s agricultural landscape experienced drought conditions at the end of March 2025.
Setting the foundation with soil fertility ensures that plants have access to the essential nutrients they need to grow and thrive, even under challenging drought conditions. Conduct regular soil tests so you can make informed decisions about whether you need to:
Add Organic Matter: Adding organic matter to the soil improves its structure, water-holding capacity, and nutrient availability, and it supports beneficial soil microorganisms.
Balance Nutrients: Ensuring a balanced supply of essential nutrients — including nitrogen, phosphorus, potassium, and micronutrients — helps prevent nutrient deficiencies that can exacerbate drought stress.
Apply Fertilizer: Well-fertilized soil promotes healthy root growth, allowing plants to access water from deeper soil layers, which is particularly important when surface moisture is limited.
Regenerative agriculture practices, which focus on improving soil health, enhancing biodiversity, and increasing the resilience of farming systems, can be particularly effective in conserving soil moisture during drought conditions. Here are two key regenerative agriculture practices to conserve soil moisture:
Soil Structure: Minimizing soil disturbance through reduced tillage or no-till practices helps maintain soil structure and porosity, enhancing water infiltration and retention.
Microbial Activity: Reduced tillage supports a healthy soil microbial community, which plays a crucial role in nutrient cycling and organic matter decomposition, further improving soil moisture retention.
Residue Cover: Leaving crop residues on the soil surface reduces evaporation and provides a protective cover that conserves soil moisture.
Soil Cover: Planting cover crops helps protect the soil surface from direct sunlight and wind, reducing evaporation and conserving soil moisture.
Root Systems: Cover crops have extensive root systems that improve soil structure, enhance water infiltration, and increase the soil’s water-holding capacity.
Organic Matter: Cover crops add organic matter to the soil, which improves its ability to retain moisture.
Some insects may become more prevalent during drought, including:
Flies (particularly impactful on cattle)
To manage these pests, it's important to monitor your fields regularly, use integrated pest management (IPM) strategies, and apply appropriate insecticides if necessary. Search the Pest Solutions pages to learn how to manage specific insect infestations.
Optimizing your existing irrigation infrastructure or investing in advanced irrigation systems can help maintain yields during drought conditions. Here are some additional strategies to effectively manage irrigation in dry weather:
Prioritize Critical Crops: Focus on irrigating high-value crops or those that are most sensitive to water stress.
Soil Moisture Monitoring: Use soil moisture sensors to monitor the moisture levels in the soil so you can make informed decisions about when and how much to irrigate.
Irrigation Scheduling: Develop an irrigation schedule based on crop water requirements, soil moisture levels, weather forecasts, and time of day (watering when it’s cooler in the early morning or late evening leads to less evaporation).
Efficient Irrigation Systems: Use efficient irrigation systems such as drip or micro-sprinkler systems that deliver water directly to the root zone, reducing water loss due to evaporation and runoff.
Optimize Planting Density: Adjust planting density to reduce competition for water among plants.
Water Conservation Practices: Implement water conservation practices such as rainwater harvesting, using cover crops to improve soil structure and water retention, and reducing tillage to maintain soil moisture.
Drought conditions can accelerate crop maturation, causing them to reach harvestable stages earlier than expected. Harvesting earlier can prevent crop loss due to premature drying, wilting, or other drought-related damage.
Dry conditions can also influence market conditions and crop prices. Adjusting the harvest schedule to align with market demand or to take advantage of higher prices can be economically beneficial.
Keep in mind that immature crops may require more careful handling and storage to prevent spoilage and maintain quality. If possible, separate higher-quality crops from lower-quality ones to maximize returns.
Prices may improve post-harvest as the full extent of the drought's impact on supply becomes clearer, so storing your crop can help you time your sales for peak profitability. However, if you don’t conduct grain bin management it may not be worth storing your crop at all. Be sure to consider:
Moisture Content Management: Since drought-stressed crops may have uneven moisture content, ensure that grain is dried to the appropriate moisture level before storage to prevent spoilage.
Ventilation and Aeration: Perforated floors or ducts can help direct air evenly, but avoid overfilling bins to ensure adequate airflow through the entire grain mass. Continuous fan operation is often necessary when first filling the bin to remove field heat, and afterwards automated aeration control systems can adjust fan operation based on real-time temperature and moisture data.
Temperature Control: Installing temperature cables in the grain bin to monitor the temperature at various depths can help identify hot spots and areas that may need additional aeration, which is important as drought’s high temperatures can cause stored grain to overheat and degrade in quality.
Calculate the ROI of grain bins for your farm.
Be strategic in your crop marketing approach to maximize returns and manage risks, keeping the following in mind:
Market Conditions and Prices: Drought can potentially lead to higher market prices due to reduced supply, but it can also lead to increased price volatility, so monitor market trends and price movements closely.
Contracting and Forward Sales: Consider using forward contracts to lock in prices for a portion of your crop, which can provide price certainty and reduce the risk of market fluctuations.
Risk Management Tools: Use hedging tools such as futures and options to manage price risk.
Diversification: In addition to diversifying your crop portfolio to spread risk, consider diversifying your markets and buyers so you reduce dependency on a single market and have greater flexibility.
Relationship Maintenance: Maintain strong relationships with your usual buyers and processors so you can manage expectations and negotiate better terms.
Get personalized, data-driven FBN grain marketing services.
Monitor and manage production costs carefully. Drought may increase certain costs, such as irrigation and pest control, so budget accordingly. It can also impact cash flow due to reduced yields and potential delays in sales.
Stress testing helps identify financial vulnerabilities in your budget, such as cash flow shortages, high debt levels, or insufficient reserves. It can also reveal operational risks, such as reliance on a single crop or market, that could be particularly impacted by drought conditions. By simulating drought scenarios, you can develop contingency plans.
Scenario Analysis | Develop different drought scenarios, ranging from mild to severe, and assess their impact on your budget and marketing plan. |
Financial Modeling | Use financial models to simulate the effects of drought on income, expenses, cash flow, and profitability. |
Sensitivity Analysis | Conduct sensitivity analysis to understand how changes in key variables (e.g., yield, market prices, input costs) impact your financial outcomes. |
Review and Adjust | Based on the results of your stress tests, review and adjust your budget, marketing plan, and risk management strategies to enhance resilience. |
Continuous Monitoring | Regularly update your stress tests and scenarios to reflect changing conditions, market trends, and new information. |
Crop insurance helps stabilize farm income by providing compensation for yield or revenue losses. This is crucial for maintaining cash flow and meeting financial obligations as well as planning for future seasons.
Be aware of government disaster assistance programs that may provide financial support and resources during drought conditions. Explore subsidies, grants, and other financial assistance programs that can help mitigate the impact of drought on your operation.
During a drought, it may be necessary to restructure existing debt to improve cash flow. This could involve refinancing loans to lower interest rates or extending repayment terms.
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