Agricultural lenders surveyed in the new 2025 ABA/Farmer Mac Agricultural Lender Survey expect only 52% of U.S. farm borrowers will be profitable this year, signaling a sharp decline from recent years. It’s also a sign producers across major crop regions are continuing to navigate through a period of tighter margins and severe financial stress.
Ninety-three percent of ag lenders expect farm debt to increase over the next year, which is up slightly from the 88% of lenders who responded that way last year. But the high number indicates there will be higher demand for farm loans, something that can be a hallmark of previous downturns.
Farm Economy Snapshot: Profit Pressure Returns
According to the survey, lenders say the 2025 farm economy is being shaped by soft commodity prices, high input costs and high interest rates — all working together to squeeze margins.
“This is the tightest farm income environment we’ve seen since before the pandemic,” said one ag lender from Iowa.
Crop producers — especially corn, soybean and cotton operations — face the most pressure due to rising costs, lower commodity prices and declining working capital.
Livestock operations, in contrast, remain relatively stable thanks to stronger protein demand and improved feed costs.
Profitability Outlook: Only Slightly More Than Half Expected to Turn a Profit
Lenders forecast that just 52% of their borrowers will remain profitable this year— the lowest level since 2016.
- West: 57% expected to be profitable
- Midwest: 52%
- Plains: 50%
- South: 45%
The gap reflects commodity mix: diversified or livestock-heavy regions remain stronger than grain-dominant areas.
“Margins are narrowing quickly, especially for grain producers. Working capital is eroding,” noted a Kansas lender.
Liquidity, Working Capital and Cash Flow Dominate Lender Concerns
For the fourth year in a row, lenders say liquidity is their top concern.
More than 70% report their borrowers’ working capital positions have worsened over the past year, and many expect additional deterioration in 2025.
Other leading lender concerns:
- Farm profitability
- Input costs
- Interest rate pressure
- Loan repayment capacity
“The producers who managed cash well in 2021 and 2022 are in much better shape. Others are scraping,” one Minnesota lender added.
One result of tighter profitability conditions is an expectation for increased loan demand. The survey found nearly 93% of responding lenders indicated they expect farm debt to increase over the next year. This would be only a slight increase from 2025, when approximately 88% of lenders reported an increase in farm debt.
With an increasing demand for farm loans, the results from ABA and Farmer Mac say the rising demand for farm loans mirrors previous downturns in the farm economy.
“Ag producers were able to use cash to finance operations as farm incomes surged in 2022 and the surrounding years. However, cash has become increasingly scarce for many operations today, prompting some producers to seek new or additional loans,” according to the report. “Previous periods of tighter farm incomes have also been accompanied by greater demand to restructure debt. As lenders evaluate farm cash flows, one solution often utilized is terming out debt — that is, refinancing short-term credits into longer-term loans, thus easing the annual impact on the income statement. Indeed, the number of lenders expecting loans backed by farm real estate to increase over the next year jumped in the 2025 survey results. “
Supplemental Income and Government Payments Are Propping Up Cash Flow
More than 53% of lenders say supplemental income sources — such as wind leases, solar leases, CRP payments or recreational leases — have become critical to producers’ bottom lines.
Meanwhile, government payments still remain a meaningful revenue source for many operations:
- Over 30% of lenders say government payments made up more than 25% of borrower income last year
- Only about 34% consider future payments in underwriting, citing uncertainty
“Alternative revenue is keeping some operators afloat,” a western lender said. “Without government support, profitability would be substantially lower.”
Farmland Values: Holding Strong — for Now
One of the biggest surprises in 2025 is farmland values remain historically high despite tightening margins.
- Farmland values rose for the fourth straight year
- Two-thirds of lenders expect land values to flatten or decline in 2026
- Limited supply of land for sale continues to hold values firm
Cash rent trends show stability:
- Seventy-three percent of lenders report no change in rental rates this year
- Nearly 90% expect rents will remain flat or decline next year
“Land values are the pressure valve,” one Nebraska lender said. “If they slip, lenders will tighten credit quickly.”
What It Means for Farmers Going Into 2025
The survey paints a picture of an ag economy shifting into a more cautious phase. For producers, this means cash flow management remains critical and margin discipline will matter more than recent years. Grain-heavy farmers should also prepare for tighter credit conditions.
For lenders, the report signals underwriting standards are tightening and there seems to be more emphasis on borrower liquidity and repayment capacity. There could also be closer monitoring of collateral, especially land values.
“We’re entering a period where strong operators will be fine, but weaker ones will feel the credit squeeze,” a Texas lender concluded.