Ag Lenders Signal Cautious Outlook for Farm Profitability in 2025

Agricultural lenders report signs of tighter conditions in farm profitability and credit quality in 2025, according to a joint survey conducted by the American Bankers Association and the Federal Agricultural Mortgage Corporation, or Farmer Mac (NYSE: AGM and AGM.A). The survey-based on responses from more than 450 agricultural lenders nationwide-provides a comprehensive snapshot of the agricultural economy and lending conditions. Even with rising pressures, the agriculture sector remains fundamentally strong, and lenders are prepared to meet producers' evolving credit needs.

Most lenders expect producers to remain profitable this year, but fewer than half are projected to stay in the black in 2026-the lowest share since 2020, according to the survey report, released today at the ABA Agricultural Bankers Conference in St. Louis. Lenders are most concerned about grain and cotton farms, with nearly 70% saying they're very worried about grain profitability-up sharply from just 15% two years ago. By contrast, lenders express much less concern about livestock operations, particularly beef and poultry, which continue to benefit from strong demand and high prices.

Despite tighter credit standards, agricultural lenders continue to meet producers' financing needs-approving roughly 84% of loan applications over the past year and expecting to renew nearly 88% of existing loans in the year ahead, the survey found.

"Ag lenders provide a clear window into how economic forces ripple through the farm economy," said Jackson Takach, Farmer Mac's chief economist. "Their insights are especially valuable this year, as we see the combined impact of abundant global grain supplies and shifting trade policies on the profitability and resilience of farmers and ranchers."

"The sentiment among agricultural lenders reflects a cautious outlook as financial pressures build on farm operations," said Ryan Lee, ABA's research and economic policy manager. "Credit quality concerns have intensified, and lenders are preparing for a more challenging year by placing increased focus on underwriting standards and loan terms. Despite these headwinds, lenders remain confident in the sector's long-term strength and are committed to supporting producers through evolving market conditions."

Key findings from the 2025 survey include:

• Profitability Outlook: Only 52% of borrowers are expected to remain profitable in 2025, with that number projected to dip below 50% in 2026-the lowest level since 2020. In addition, nearly 93% of lenders expect farm debt to increase over the next year, reflecting tighter working capital and increased reliance on credit.
• Top Lender Concerns for Producers: Farm income and working capital remain the top concerns for lenders, followed closely by inflationary pressures.
• Top Overall Concerns for Lenders: Credit quality and agricultural loan deterioration ranked as the top overall concern for lending institutions in 2025, followed by lender competition and interest rate volatility.
• Credit Quality: While delinquency and charge-off rates remained relatively stable, lenders reported signs of deterioration and expect further declines in credit quality over the next 12 months.
• Loan Demand: Demand for loans secured by farmland and agricultural production loans increased in 2025, with expectations for further growth in 2026.
• Farmland Values: Farmland value growth slowed in 2025, and lenders anticipate a modest decline in national average cropland values over the next year.
• Secondary Market. With liquidity and credit risk topping lenders' concerns for 2025, secondary market programs have become even more vital. Facing tighter margins and higher rates, lenders continue to rely on Farmer Mac to manage balance sheet risk and maintain funding capacity. This year, 77% reported using Farmer Mac for agricultural real estate and USDA-guaranteed loans, up from 67% in 2024-reflecting Farmer Mac's fundamental role in sustaining credit access across the agricultural economy.

Lenders also reported continued investment in technology to streamline underwriting and loan servicing. More than half of respondents indicated their institutions implemented digitization efforts in 2025, with a focus on improving credit decisions and loan applications.

The survey highlighted demographic shifts in agriculture, with lenders reporting an uptick in farm retirements and rising family living costs. More than 75% of lenders expect retirements to accelerate in the next 12 months.

"Farmer Mac has long been a crucial ally in helping agricultural bankers serve their customers, and is a valued Premier Partner of ABA," said Ed Elfmann, ABA's senior vice president of agricultural and rural banking policy. "As we head into 2026, many lenders are bracing for credit stress and greater uncertainty across the farm economy. In times like these, Farmer Mac's ability to provide liquidity and tools to manage credit and interest-rate risk becomes even more essential to helping lenders support the farmers and ranchers who keep rural America strong."

About the Survey
Now in its 10th year, the annual ABA and Farmer Mac Agricultural Lender Survey is a joint effort to provide a detailed snapshot of the agricultural economy and lending conditions across the U.S from the unique perspective of ag lenders. The survey was distributed via email between July 14 and Aug. 15, 2025. More than 450 loan officers, managers and executives responded to the questionnaire. Responses represent a range of institutions by size and by geography. The report breaks down results by general agricultural economic insights and by factors affecting lending institutions.

ABA and Farmer Mac have been working together for more than a decade to offer the financial and educational tools bankers need to serve their agricultural customers. The partnership reflects the two organizations' shared commitment to strengthening agricultural finance and supporting rural communities.

To view the full Agricultural Lender Survey Report, please visit aba.com/agsurvey.

About Farmer Mac
Farmer Mac is driven by its mission to increase the accessibility of financing to provide vital liquidity for American agriculture and rural infrastructure. Our secondary market provides liquidity to our nation's agricultural and infrastructure businesses, supporting a vibrant and strong rural America. We offer a wide range of solutions to help meet financial institutions' growth, liquidity, risk management, and capital relief needs across diverse markets, including agriculture, agribusiness, broadband infrastructure, power and utilities, and renewable energy. We are uniquely positioned to facilitate competitive access to financing that fuels growth, innovation, and prosperity in America's rural and agricultural communities.

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About the American Bankers Association

The American Bankers Association is the voice of the nation's $25 trillion banking industry, which is composed of small, regional and large banks that together employ approximately 2.1 million people, safeguard $19.7 trillion in deposits and extend $13.1 trillion in loans.