The 2024 Ag Lender Survey by the American Bankers Association and Federal Agricultural Mortgage Corporation reveals rising concerns over U.S. farmers’ profitability. Lenders estimate that only 58% of borrowers will be profitable. That is down from 78% last year.

By 2025, lenders predict only 51% of producers will remain profitable. This is the lowest level since 2020. The decline is attributed to lower export demand and high global inventories, which have suppressed commodity prices. Not all sectors of the ag economy are projected to perform the same. Lenders to livestock producers remain more optimistic than lenders to crop producers.

While land values continue to rise, they may level off or even drop. Lenders anticipate increased demand for both farmland and production loans. However, the credit quality of agricultural loans may deteriorate, prompting many banks to tighten lending standards.

Top concerns for agricultural lenders include credit quality, competition and interest rate volatility. Although loan approval rates remain high, the majority of new loans have shifted to variable rates, increasing borrowers’ risk in a volatile interest rate environment. Many farmers are also interested in financing technology and regenerative practices. The survey underscores lenders’ cautious but supportive approach amid a challenging landscape for U.S. agriculture.

Read more on ag lenders’ concerns over U.S. farm profitability here.