Some Farmers See Tougher Times Ahead as the Industry Takes on More Debt

By Will Bauer

Lending among the farm sector hit historic lows a couple of years ago, but that trend has reversed with farmers’ borrowing on the rise.

Slim profit margins, driven by decreased commodity prices and higher input costs, have left the agricultural sector with less cash, according to economists.

“There’s not a ton of money to go around farmers right now,” said Anna Morrell, a farmer who raises poultry, eggs and produce. “With federal freezes and tariffs, I’m not quite sure how we’re all going to fare.”

Even though Morrell isn’t currently financing any projects on the farm, she worries it’s a sign of tougher times ahead, especially for younger farmers, and the economic conditions pressuring her industry could require more farmers to take on more debt.

“Even in the best of times, the profit margin is so slim,” said Morrell, who is also the president of Central Illinois Young Farmers Coalition.

Non-real estate farm loans increased 25% last year, and other data suggests that trend will continue into 2025. However, while not all agricultural economists believe the increased levels of borrowing by farmers is immediately problematic, there remains a level of uncertainty given President Donald Trump’s back-and-forth trade agenda.

“The concern would be if this type of environment, meaning reduced profit margins, persists for some amount of time  a year, two years, three years  you could envision some scenarios where it does lead to more financial stress,” said Nate Kauffman, the branch executive of the Omaha Office of the Federal Reserve Bank of Kansas City.

What led to these conditions?

The prices of major American commodities, like corn, wheat and soybeans, have largely all been trickling down since spring 2022.

For example, Soybeans carried a value of $17.69 per bushel, but they have since dropped to $10.51, according to Business Insider.

Coupled with elevated input costs for things like farm equipment and fertilizer, farmers are being pinched.

“It makes it really tough,” said Tait Berg, a farmer and an economist with the Federal Reserve Bank of Minneapolis. “There's a squeeze on both sides of the equation.”