NASHVILLE, Tenn. (RFD-TV) — Farm debt at agricultural banks continued to rise in the second quarter of 2025, driven by tighter margins for crop producers and steady demand for financing, according to the Federal Reserve Bank of Kansas City.
While loan delinquency rates remain low at just 1.3 percent, they ticked slightly higher as farm financial conditions weakened. Agricultural banks—defined as those with at least a quarter of lending tied to farm loans—reported stronger growth than other lenders, with half seeing loan balances increase by more than 5 percent and a quarter posting gains over 10 percent.
Real estate debt at farm-focused banks rose 5 percent year-over-year, while production loans increased nearly 10 percent. By contrast, non-agricultural banks showed flat to declining farm loan balances. Record farm debt levels are being offset by relatively strong earnings at agricultural banks, supported by higher interest margins; however, liquidity has tightened as loan-to-deposit ratios have crept upward.
The Fed notes that conditions remain uneven across the agricultural sector. Livestock producers, particularly cattle operators, are experiencing more substantial returns, while crop producers are facing low commodity prices and high input costs. Government relief payments and firm land values have provided some cushion, but weaker profitability is likely to keep credit demand elevated into 2026.
Farm-Level Takeaway: Farm debt is climbing to record levels at ag banks, reflecting pressure on crop producers’ finances even as livestock and land values lend stability to the sector.
Farmers are in the midst of harvest as the government descends into a shutdown and the Farm Bill expires. Key federal departments, crop reporting, and aid programs important to the agricultural sector are now on hold.
October 02, 2025 10:54 AM
·
Farmers face tighter barge capacity and higher freight costs during peak harvest.
October 01, 2025 04:06 PM
·
Jeramy Stephens, with National Land Realty, says that despite today’s economic headwinds, farmland remains a resilient asset — and understanding local conditions is key to making sound decisions.
October 01, 2025 03:42 PM
·
The U.S. pork industry is staying vigilant in keeping its supply safe from foreign animal diseases like African Swine Fever.
October 01, 2025 01:09 PM
·
“American soybean farmers—who are already reeling from your sweeping tariffs—deserve better.”
October 01, 2025 12:33 PM
·
The shutdown is yet another hurdle for producers navigating a challenging year marked by high input costs, volatile markets, and uncertain trade conditions.
October 01, 2025 10:45 AM
·
With China’s pullback, U.S. sorghum producers must broaden their export markets. Building connections now could help stabilize prices and demand for the upcoming larger crop.
September 30, 2025 04:23 PM
·
Alan Bjerga, with the National Milk Producers Federation, joined us on Tuesday from Wisconsin with his Dairy Industry Outlook.
September 30, 2025 01:27 PM
·
The Final Grain Stocks Report may be the last key figures we see if a government shutdown halts future updates.
September 30, 2025 12:25 PM
·
