Ag Bankers Warn of Rising Row Crop Risks

Demand for farm loans is on the rise. Cattle producers look to expand amid record beef prices, while row-crop producers try to survive another season of compressed profit margins.

To understand how the agriculture lending industry is positioning itself for the challenges ahead, Progressive Farmer reached out to different kinds of lenders from across the country with questions about interest rates, portfolio health and the evolving needs of farm operations. Their responses reflect the challenges posed by a higher-interest-rate environment but also optimism about the resilience of today's agriculture producers.

Some of the answers have been edited for length or clarity. More detailed responses to these questions and others can be found throughout October 2025 on https://DTNPF.com/…

QUESTION: Where do you think interest rates will be in the next few years? Ideally, where would you like to see interest rates?

ANSWER: David White Sr., Commercial Relationship Manager, Commodities and Correspondent Banking, Intrust Bank, Wichita, Kansas

"The talking points coming from recent Federal Reserve meetings, as well as their 'Dot Plot' would indicate some modest reductions in interest rates -- to the tune of 0.50% -- over the next year. Their longer-run projections show about a 1.5% drop in the three-year time span, which would be a return to more historically normal rates. Of course, there are many unknowns, such as inflation, tariffs and general GDP [gross domestic product] fluctuations that could complicate and change that projection.

"A Fed Funds rate in the 3% range, which translates to a prime borrowing rate around 6%, seems to be a stable interest rate environment. At that rate level, banks can generate stable returns, and borrowers seem to be able to handle interest expenses more comfortably within their operating budgets."

QUESTION: How much of your portfolio could become troubled loans if crop prices remain in this current range for another year?

ANSWER: Heather Malcolm, Vice President of Ag Lending, Bank of the Rockies, Livingston, Montana

"The majority of my loan portfolio here in Montana is cow/calf producers. Currently, the cow/calf portion of the industry is seeing record high prices, and with these higher calf prices, we shouldn't see many troubled borrowers this year."

ANSWER: Caleb Hopkins, Loan Production Officer, Dakota Mac, Halbur, Iowa

"Operations that are only grain are really going to feel it this year compared to other operations that are more diversified, such as operations with livestock. Over time, more and more operations have become grain-focused due to the labor requirements of livestock. This increases the number of operations that are really going to have negative effects if crop prices remain in this current range."

QUESTION: What differences do you see in your portfolios and their financial needs for the year ahead?

ANSWER: Chad Gent, Senior Vice President of Retail Credit, Farm Credit Services of America, Frontier Farm Credit and AgCountry Farm Credit, based in Omaha, Nebraska

"Some of our grain customers have seen profits drastically reduced or eliminated over the last two years. This is a critical period for operations as they assess the level of impact the reduced margins make to their operation. Some operations can weather the storm with only minor adjustments because of their high liquidity and limited debt service demands. Others may need to make more significant adjustments to lower their cost of production, rein in nonfarm expenses or deleverage their operation to make it viable in a lower margin environment. In 2024 and 2025, we have expanded our deployment of financial counseling specialists across our lending regions to help customers explore options for change."

QUESTION: How does this downcycle compare to 2013-2019?

ANSWER: Hopkins. "The biggest differences are interest rates and inflation. In the last downturn, you had decreasing interest rates with increasing or steady land values. So, you were able to refinance operations from maybe a 6% rate to 4% or less, and increase the overall cash-flow of those operations. Compared to now, when we are coming out of a time of historic inflation on farm assets along with interest rates increasing from all-time lows back to 7 to 8%. It's really hard, if not impossible, to find a solution that improves the overall viability of the operation in that environment."

ANSWER: Kevin Kuper, Chief Credit Officer, Farm Credit Mid-America, serving Arkansas, Indiana, Kentucky, Missouri, Ohio and Tennessee

"This cycle is different because most producers came into it with stronger balance sheets, thanks to several years of historically high profits. Many have built up liquidity and working capital, and they're using those reserves to navigate tighter margins now. A colleague of mine used to encourage farmers to think about their balance sheets like a football team's defense: Earnings are the defensive line, liquidity is the linebackers and equity is the defensive backs. Farmers are relying heavily on those linebackers to keep them in the game during this cycle."

QUESTION: What changes do you see farmers making to manage their finances?

ANSWER: White. "We have seen some slowdown in capital expenditures such as equipment upgrades. Others are adjusting by managing inputs, such as less prepaying for seed, fertilizer and other inputs as interest rates are sometimes higher than the cash discounts they can receive from retailers. Another change I have seen is being more aggressive to sell grain rather than store it, as the interest cost of carrying that grain often exceeds the carry in the futures market to hold onto that grain."

ANSWER: Malcolm. "Most of the farmers are becoming better finance managers. They know their costs and know what income is needed to meet their costs, as well as any debt payments they have. They understand not only their cost of production but how that correlates with the rest of their budget. They are researching costs, i.e., whether a new piece of equipment is wanted or needed, or could it be repaired instead? They are finding different suppliers. They are utilizing various risk-management tools for contracting their commodities and also utilizing government programs where applicable."

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