According to agricultural lenders responding to the Federal Reserve Bank of Minneapolis’ recent Ag Credit Survey, farm incomes and spending decreased over the first three months of the year.
Lenders reported that interest rates for most farm loans increased slightly, while demand for credit increased. Loan renewals and extensions also increased, while rates of loan repayment declined. Farmland values were roughly flat on average from a year earlier across the Federal Reserve’s Ninth District, and cash rents fell slightly. The outlook for the beginning of this year’s growing season was pessimistic, as respondents expected further declines in farm incomes and spending.
Joe Mahon, director of regional outreach for the Federal Reserve Bank of Minneapolis, reported that more than 75% of district agricultural lenders said incomes decreased in the first three months of 2026 compared with the same period in 2025. “Despite strong harvests in much of the district and relatively stable or somewhat improving crop prices at the end of 2025, incomes fell again in the recent quarter,” the survey reported.
Investment in equipment and buildings fell, with 65% reporting decreased capital spending, compared with 4% reporting an increase.
With reduced cashflow, bankers also reported that credit needs grew. Demand for loans increased in the first quarter from a year earlier according to 46% of respondents, compared with 13% who noted decreased loan demand.
Ag bankers’ outlooks heading into the growing season were generally negative, Mahon said. Half of survey respondents predicted that farm income will decrease in the second quarter from the same period last year. This represents some improvement from the first quarter, however, only 7% forecast increased incomes. The capital spending outlook was also down sharply, with 61% expecting declines.
More than half of respondents expected a further uptick in loan demand in the upcoming quarter. Lenders also expected renewals and extensions to increase but loan repayment rates to decrease further. More than a third of respondents expected to increase collateral requirements for borrowers. “The uncertainty is hard to manage,” according to a respondent from South Dakota. “As a lender we will be more conservative.”
The survey was conducted in April and covers first-quarter activity.
