Agricultural lenders expect 40% of their borrowers to be unprofitable this year, according to a survey by the American Bankers Association and Farmer Mac.
Farm Lenders Expect 40% of Borrowers to Be Unprofitable in 2026
Share
High costs continue to squeeze farm profits, while federal payments and strong cattle prices provide some relief. David Miller reports on an agricultural lender survey and the risks of relying on continued borrowing to keep farming.
Transcript
There is a lot of pressure squeezing farm profits according to 75% of the U.S. agricultural bankers responding to this year’s American Bankers Association and Farmer Mac survey. Lenders estimate that 40% of their borrowers will not be profitable this year.
Austin Peiffer, Ag & Business Legal Strategies: (~13:06–15:28) “The person who’s lending you money, they’re probably a good person. They’re probably not trying to put you in a bad position, but ultimately their interest is in making the loan and getting it paid back… Making next year’s loan is next year’s problem.”
The survey also revealed high energy costs and inflationary pressure was being offset by projected record federal payments and history making cattle prices. Responses varied based on commodity and region where the loans originated.
Loan performance was strong but agricultural loan delinquencies and debt write-offs were higher. However, only a smaller share of lenders plan to tighten underwriting standards. Next year the loan approval rate is expected to reach 88%.
Austin Peiffer, Ag & Business Legal Strategies: (~06:30–07:40) “If you’re at 50% debt to equity ratio, that’s high. You’re in a distress situation. I’m not sure I’ve ever seen a client come in with even as low as 50%… It’s the people whose attitude is, ‘I’ll keep farming as long as the bank will keep lending me money.’”
For Market to Market, I’m David Miller.
Watch More
Warming waters push lobsters farther north, forcing fishing families to travel farther and spend more to bring in their catch.
Farm lending, hay shortages and warming waters challenge producers. Ted Seifried analyzes markets.
Ted Seifried discusses corn recovery signals, soybean exports and South American weather risks.
Ranchers in western Idaho face hay and fencing shortages after wildfire and drought. Neighboring communities are donating hay to help families recover.
Corn, soybeans and wheat are oversold like never before, says Ted Seifried in our Market Analysis.
Twice as many Americans say their finances are getting worse as say they're getting better. Glynn Tonsor of the Meat Demand Monitor explains how that K-shaped split shows up in restaurant visits and what's for dinner.