Only Half of Farmers Profitable
Published: Friday, November 28, 2025
AgWeb's Tyne Morgan reported that "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," Morgan reported. "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," Morgan reported. "Livestock operations, in contrast, remain relatively stable thanks to stronger protein demand and improved feed costs."
"Unfortunately, lenders do not expect profitability to improve over the coming year," the Farmer Mac survey said. "Survey responses show lenders project slightly less than half of borrowers will remain profitable in 2026. If realized, this would be the lowest proportion of profitable farmers since 2020, according to lender responses."
Progressive Farmer's Katie Micik Dehlinger reported that "each year, Farmer Mac and the American Bankers Assn. survey ag lenders on their biggest concerns. Liquidity and farm incomes topped the list this year, although (Jason) Takach, (chief economist and vice president of strategy at Farmer Mac) said there are differences within the data. Banks with strong cattle portfolios aren't as worried because profits in the sector are near records."
"'Inflation is routinely listed as a top concern, but it's kind of bubbled down a little bit,' Takach said, adding that farmers are feeling the inflationary pressure not only from the rising cost of inputs, but also from their household expense," Dehlinger reported. "Pauline Van Nurden, the associate director at University of Minnesota's Center for Farm Financial Management, said their data shows it takes about $110,000 per year to cover total personal expenses for a family of three when you include taxes and larger capital purchases, such as replacing an appliance or family car."
"Dr. David Kohl, ag economist and professor emeritus at Virgina Tech who regularly trains bankers, said he's hearing many family living expenses are getting wrapped up in operating loan renewals this year, in some cases to the farmer's detriment," Dehlinger reported. "'This where your stress occurs,' he said, citing anecdotal evidence from his discussions over the summer of rising divorce rates. He's heard a larger number of land sales are motivated by the dissolution of 30-plus-year marriages, which caused several bankers in the room to nod their head."
"On the production side, Takach has heard of many creative ways farmers are attempting to control costs, like pooling together to buy inputs in bulk," Dehlinger reported. "'Being proactive on the cost side can make a big difference,' he said."
Agri-Pulse's Kim Chipman reported that "as far as available financial information, farmer bankruptcies doubled in this year's first quarter versus the same period a year ago, but they also are at an all-time low on a three-year basis, said Ed Elfman, senior vice president of Agricultural and Rural Banking for ABA. While the industry's bankruptcy numbers remain below other difficult eras, and well below the crisis-filled 1980s, there's a three- to six-month lag in key indicators."
"On measures like loan renewals, which typically happen from December until around March, 'right now we don't have the data to tell us that it's looking bad,'" Elfman said," according to Chipman's reporting. "'What's interesting, though, is when you look at the Federal Reserve surveys and some of the other things that have come out, the sentiment is that loan renewals will go down and loan demand will go up, which tells us that the ag economy is struggling a bit,' he said."
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