NASHVILLE, TENN. (RFD NEWS) — We have new details right now on the state of the agricultural economy, which experts across the industry agree is in dire straits —despite forthcoming aid from the U.S. Department of Agriculture (USDA) —, including a drop in export sales and rising input costs, while farmers continue to shoulder the bulk of losses from last year’s crops.
Modern Ag Alliance just released a report highlighting the state of the American farmer, issuing a major warning to the industry. They warn that industry is facing one of its most challenging periods ever, with economic pressures creating the most strain.
Researchers found that only half of U.S. farmers were expected to be profitable over the last year, while farm bankruptcies increased by 60 percent during the same period. They also cite regulatory uncertainties, saying they are making the decision even more difficult.
Tough times often mean there is a need for more operating income, and many farmers this year are asking for bigger loans.
“You look at this compared to January 2025; it was somewhat similar. We saw a slight uptick in the percentage who thought their operating loan would be larger: 21 percent in January 2026 and 18 percent in January 2025. This is the first question of a two-question series. The second question is usually more interesting. And what we do there is take a deep dive, and we look at the reasons why people expect a larger operating loan.”
Analysts at Purdue University say a third of producers are falling behind on operating debt. That is in line with the struggles many felt back in 2020.
Farmer Bridge Assistance Program Payments Coming in February
USDA Undersecretary Richard Fordyce says everything is on track to get help in the hands of producers this month.
“We’ve gotten most of the procedural things done in order to get the payments out by the end of February, and that timeline looks good,” Fordyce says. “I mean, we’re very confident we’re going to be able to do that. One way we’ll deploy this program is through login.gov, a federal government portal. It’s not unique to USDA. For example, Veterans Affairs [and the] Internal Revenue Service uses it to a degree, and other federal agencies, but it’s simply a portal that folks need to set up an account in.” Fordyce says producers need to create an account at login.gov as soon as possible. These payments are based on planted acres, not on harvested production. Of the total $12 billion in aid, $1 billion is set aside for specialty crop growers. Payment rates for those crops are still being finalized.
While the other $11 million is set aside for row crop growers. However, a recent analysis from the Farm Bureau found that these payments will cover less than half of producer losses in 2025.
Farm Bankruptcies Rise Again as Financial Pressures Intensify
Farm financial stress continued to deepen in 2025 as Chapter 12 farm bankruptcies climbed for a second consecutive year, signaling mounting strain across much of U.S. agriculture. Court records show 315 Chapter 12 filings during the year, a 46 percent increase from 2024 and the highest level since the pandemic-era surge.
Losses across major crop and livestock sectors drove the increase, according to a new report from the American Farm Bureau Federation.
The Midwest and Southeast accounted for more than two-thirds of filings, reflecting prolonged declines in farm receipts combined with persistently high input costs. Arkansas led the nation with 33 filings, followed by sharp increases in Georgia, Iowa, Wisconsin, and Minnesota, where margins in row crops, dairy, and livestock narrowed simultaneously.
Rising reliance on credit has compounded the problem. Larger operating loans, longer repayment terms, and interest expenses projected to reach record levels in 2026 have left many operations with little room to absorb another poor year. USDA projects total farm debt climbing to a new high, underscoring the growing dependence on borrowed capital just to stay operational.
Chapter 12 relief remains unavailable to many family farms, however, particularly those relying on off-farm income, leaving closures as the only option for some producers.
Larger Operating Loans Drive Farm Lending Growth
Farm lending activity strengthened in 2025 as producers relied more heavily on operating loans to manage tighter cash flow and higher production costs. New data from the National Survey of Terms of Lending to Farmers show a sharp increase in both the size and volume of non-real-estate farm loans.
The volume of new operating loans rose nearly 40 percent year over year in the fourth quarter and averaged more than 20 percent growth across 2025. Inflation-adjusted operating loan sizes were about 30 percent larger than the previous year, reflecting elevated input costs and expanded financing needs. Increased feeder cattle lending also contributed to stronger loan demand.
Loan terms adjusted alongside rising balances. Average maturities for operating loans increased by roughly three months from 2024 and reached record highs late in the year. Machinery and equipment loan maturities also lengthened, signaling efforts to spread repayment over longer periods.
Interest rates moved lower but remained above long-term norms. Rates on non-real estate loans declined for the sixth straight quarter, with larger loans seeing larger reductions than smaller notes. At the same time, more than 80 percent of operating loans carried variable rates as borrowers positioned for potential further declines.
