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Weakening farm income for crop producers, increasing operating expenses, and rising feeder cattle prices led to more farm debt in 2025. According to Ty Kreitman of the Federal Reserve Bank of Kansas City, the volume of new farm operating loans nationwide was about 20% greater in the 3rd quarter of 2025 compared to the same quarter in 2024, and the average dollar size of loan was 30% more. Over 40% of Nebraska lenders reported higher loan demand, one of the highest in the Tenth District (Figure 2). |
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Figure 2. Farm Loan Demand in Kansas City Federal Reserve District |
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Source: Fransico Scott and Ty Kreitman, Disparate Conditions in Crop and Livestock Sectors Evident in Credit Conditions, Kansas City Federal Reserve Bank, Agricultural Credit Survey, November 7, 2025. |
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The Kansas City bank also reported slightly lower loan repayment rates across the Tenth District. Nebraska, though, was one of two states where bankers reported slightly improved repayment rates. However, while repayment rates improved in Nebraska, the proportion of loans on banks’ watch and classified lists rose to about 9% and 4%, respectively. Lenders also reported a modest increase in asset liquidation. More lenders said borrowers planned to sell assets to strengthen farm finances and the share of lenders who indicated borrowers did not plan to sell assets declined from 60% to 20%. Thus, loan volume, size, and repayment rates suggest producer financial health at the end of 2025 was slightly weakened compared to the beginning of the year. |
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Figure 3. Kansas City Federal Reserve Loan Repayment Rates |
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Source: Fransico Scott and Ty Kreitman, Disparate Conditions in Crop and Livestock Sectors Evident in Credit Conditions, Kansas City Federal Reserve Bank, Agricultural Credit Survey, November 7, 2025. |
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Figure 4. Average Interest Rates, Kansas City Federal Reserve Bank District |
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Source: Ty Kreitman, Larger Operating and Livestock Loans Drive Farm Lending Demand, National Survey of Terms of Lending to Farmers, Kansas City Federal Reserve Bank, October 15, 2025. |
