LUBBOCK, Texas (RFD NEWS) — Long-term borrowing costs at the farmgate are expected to remain elevated into 2026, shaping financing decisions for land, equipment, and expansion across U.S. agriculture.
Matt Erickson with Terrain Ag says inflation expectations, a higher neutral policy rate, and an elevated term premium are keeping long-term Treasury yields — a key benchmark for farm lending — from declining significantly. At the same time, the Federal Reserve’s gradual easing is expected to lower short-term interest rates only modestly.
Operationally, Erickson says resilient labor markets, steady income growth, and persistent fiscal deficits are supporting higher long-term yields. He notes rising Treasury issuance and stronger domestic investor demand are also helping keep financing costs elevated.
For producers, lower short-term rates could trim operating loan costs for inputs, but persistently high long-term rates continue to pressure borrowing tied to land, equipment, and refinancing decisions. Regionally, elevated borrowing costs are influencing expansion plans across crop and livestock sectors, particularly in capital-intensive operations.
Looking ahead, Erickson says the outlook favors disciplined balance sheet management, liquidity, and targeted investment over aggressive debt-driven growth strategies.
Recent changes to crop insurance subsidies under the “One Big Beautiful Bill” Act (OBBBA) have substantially increased benefits available to beginning farmers.
Farm CPA Paul Neiffer joined us on Thursday’s Market Day Report to review the advantages of the new provisions and how farmers can capitalize on them.
In his interview with RFD News, Neiffer outlined the main changes to crop insurance subsidies and highlighted additional benefits available for beginning farmers. He also discussed considerations for children who wish to farm alongside their parents and reviewed the requirements producers need to meet to qualify for the beginning farmer program.
