Why does anyone make a bad business arrangement? Farmers aren't the first entrepreneurs to misunderstand the limitations placed on them by contract, or to accept those limitations in exchange for fast liquidity.
Monsanto has genetically-modified (and patented) crops that produce 2x or more per acre of land. Sometimes they're the only way to make land profitable.
To me, that sounds like a market problem. I routinely pay more than twice the going rate for standard produce precisely because I recognize the problem cheap produce presents. I'm not suggesting that most people would make the same decision, but then most people aren't aware of the legal battles occurring in the fields where that food was grown.
Eventually, something must give. Either cheap, GMO food will prevail (likely) or it'll fall (unlikely). Either situation will result in much higher food prices, either from more expensive farming methods or from companies like Monsanto being at liberty to extract more from the consumers who now have no alternatives.
Farmers in the United States in particular are mostly in a commodity business and the market for non-GMO products is relatively small so there is not room for all, most, or even a large minority of farms to accept the lower productivity of non-GMO crops for higher prices.
On top of that the situation is still more complex, crop variety research in everything but Wheat and Oats is dominated by private industry so their interest is to ensure that any new varieties fall under the patent protection regime that GMO crops offer because the protections are better than plant-breeders rights. (Also I disagree with the 2x difference posted above but do agree that the divergence has become substantial.)
In addition because the global fertilizer business is effectively a cartel fertilizer prices have nothing to do with the costs of production but instead what the market will bear. (Natural gas is a key element and has been near all-time lows for quite a while but fertilizer prices are relatively high.) So the fertilizer companies are pricing to ensure that you must stay on the highest-productivity path in order to stay above water.
Finally, the vast majority of modern farmers in North America have gone from being cooperative-oriented to more pro-market and largely believe that this current state of affairs is somehow in their best interests -- what is good for agribusiness is good for farmers. It is my humble opinion that the market is totally broken and farmers are very ineffective at working together to counter-balance the powers of the large corporations in the industry.
