BLACKSBURG, Va. (RFD-TV) — A new survey of agricultural lenders shows farm finances remain under pressure, with many producers struggling to turn a profit this year.
The American Bankers Association says 75% of lenders report tighter farm profitability, while an estimated four in 10 farm borrowers are not expected to turn a profit despite government payments.
Higher input costs are also driving increased demand for farm loans. While loan delinquencies are rising, economists say credit conditions remain healthy, though lenders expect financial pressure to continue into next year.
Virginia Tech agricultural professor Dr. David Kohl says locking in prices can be risky, particularly as input costs continue to squeeze farm margins.
“One of the things that I find is whether it’s on the price side, the cost side, you’re going to leave money on the table. Get over it, move on. One of the things we do in our businesses, we’ll do financial scenario planning, that establishes those guardrails and best average, worst case scenario, and we adjust for price, cost, interest rates now, and production. I think one of the things that gets you into objective decision-making versus emotional - and hey, I can be emotional too. I look at the headlines – again, it’s going back to those numbers. And if you make a mistake, you know what the old saying is: if you make a mistake, fail fast and learn faster.”
Kohl encourages producers to focus on objective financial decisions rather than reacting emotionally to changing market conditions.
