In 2025, the average size of loans for farmer operating expenses reached a record high (30% higher than last year) and pushed up lending volumes, according to the National Survey of Terms of Lending to Farmers. As noted by Federal Reserve of Kansas City Economist, Ty Kreitman, demand for farm loans has risen with tighter working capital, elevated production costs and higher cattle prices.
What is the outlook for on-farm finances?
USDA did not issue a farm income forecast in December, due to the government shutdown. With a pending update coming at the beginning of February, Meridian Agribusiness Advisors and Ag Access partnered on a farmer-facing survey to provide insights.
“There’s a group of farmers that are doing okay now, and I think that’s something for us to celebrate in the farm economy that farmers are being resilient through this period and finding opportunities, but there are others in our community that need help right now,” says Wes Davis Meridian economist. “It may look like if you’re looking at a traffic light it would be a yellow light. But, I would describe it more as a check engine light.”
Davis says from the recent survey, he can pull forward a divergence between those farm businesses focused on row crops and livestock.
Whereas 56% of livestock farmers in their survey said their working capital situation was very strong or somewhat strong, only 43% of crop farmers said the same.
About that same range for both groups say working capital is tight or very tight.
“There is that group of farmers, 10% to 15% of them, that are challenged with working capital,” Davis says. “They are questioning if they can stay in business this year.”
Mike Mostransky of Ag Access shares the survey had national representation but about 70% of respondents were from the Midwest.
For 2026, the survey sponsors say profitability expectations are factoring into two developments:
- A change in behaviors for operating expenditures
- Further erosion of working capital
“Farmers who are in challenging times look for help from their input providers, their financial service providers and other,” Davis says. “Farmers are asking them questions like: ‘How can I adjust what I’m doing without compromising my yield and my financial outcomes?’ And they’re looking for a thought partner that can help them with that.”
For row crop respondents, the top actions to preserve operating expenses were listed to be: switching to generics, reducing field passes, reducing or delaying fertilizer rates, and changing crop rotation.
“There’s a position right now that they don’t know what they don’t know, and they’re not about to take the risk.” Mostransky says. “It’s clear farmers are more focused on machinery repair rather than replacement. And they are saying things like, ‘give me your best price the first time, because you won’t get a second or third time.’”
Meanwhile, livestock farmers are more likely to be positioned to see opportunities with expenditures such as herd expansion, investing in genetics, low-inclusion feed additives and animal health products.
Click here for the latest report from the Federal Reserve of Kansas City.