KANSAS CITY, Mo. (RFD-TV) — Farm credit conditions tightened again in the third quarter as weaker crop margins eroded working capital across much of the Midwest and Plains, according to the Kansas City Federal Reserve’s Ag Credit Survey. The KC Fed reported continued declines in farm income and loan repayment rates, alongside rising renewal activity that signals growing financial strain for many operations.
Non-real estate loan demand increased steadily, driven by higher operating needs and tighter liquidity among crop farms. The KC, Chicago, and Minneapolis districts reported the strongest upticks in financing needs, while fund availability slipped modestly in several regions as lenders became more cautious.
Capital spending fell at the fastest rate since early 2020, underscoring tighter budgets, though household spending stabilized after years of growth. These shifts reflect limited profit opportunities for crop producers, despite some recent price improvements.
Regionally, farmland real estate values provided a key stabilizing force. Non-irrigated cropland values held firm or increased in more than half of the surveyed states, with Oklahoma and Texas showing the strongest gains.
Looking ahead, the KC Fed notes that financial stress remains contained overall, supported by firm land values and earlier relief funding — but highly leveraged crop farms face the greatest pressure as credit conditions continue to tighten.
Farm-Level Takeaway: Working capital is tightening for crop farms, increasing reliance on operating loans even as land values steady in the broader sector.
Tony St. James, RFD-TV Markets Specialist
December 17, 2025 12:56 PM
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