By John Newton
Key Takeaways
- Farm country has endured three consecutive years of worsening economic conditions, spreading financial stress across much of rural America.
- A prolonged cost-price squeeze has increased demand for credit, reduced equipment purchases and contributed to a slight uptick in farm bankruptcies.
- Farmland values continue to provide equity support for farmers, helping to keep aggregate debt-to-asset ratios low and support access to capital.
- Policy solutions such as year-round E15, the farm bill and economic aid are within reach in the Senate, offering opportunities to improve farm income, expand market access and support rural economies.
The U.S. farm economy is currently in the 12th consecutive quarter of a farm economic downturn, and given the cumulative effect of inflation, new economic pressures on input costs such as fertilizers and fuel, and crop prices below breakeven, how long the current downturn lasts will depend a lot on congressional action in the coming weeks and months.
According to the most recent data from the Kansas City Fed’s Agricultural Credit Survey, the farm income diffusion index — which measures the year-over-year change in economic conditions — was 66 in the first quarter of 2026, marking three straight years of deteriorating economic conditions on the farm and the longest downturn since that began in 2013 and lasted until 2020-2021.
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