Deeper Concerns In Latest Ag Economy Barometer

Farmer sentiment dropped sharply in the January Purdue University/CME Group Ag Economy Barometer.  

One troubling trend in this month’s farmer survey, according to Purdue University’s Michael Langemeier, is the increasing size of operating loans in 2026.  He noted there are bigger loans in store for more farmers this year.

“The first question asked if respondents expect the size of their operating loan to be larger, smaller, or about the same this year," Langemeier said.  "You look at this compared to January ‘25, it was somewhat similar. We did see a slight uptick in the percentage who thought their operating loan was going to be larger; 21% in January ‘26 and 18% in January ’25. This is the first question of a two-question series. The second question is usually more interesting. And what we do there is take a deep dive, and we look at the reasons why people expect a larger operating loan.”

Input Costs Leading To Bigger Loans

The more important question, Langemeier added is why those operating loans are getting larger.

“It's one thing to expect a larger operating loan due to higher input costs than unpaid operating debt," said Langemeier.  "There's a lot of difference between those two, so let me explain that a little bit. First of all, if we look at this over time into January ’21, ’22, ’23, and ’24, over 60% said they were going to increase their operating size because of higher input costs. Since January ’25, that's been around 50%-55% who say they're increasing the size of their loan because of an increase in input costs. Of course, break-even prices remain relatively high, particularly for crops right now, but also for quite a few livestock species. That's not really surprising. That would be the main reason why they expect a higher operating loan. What I want you to focus on now is the last one, that third one, which is unpaid operating debt.”

Financial Stress Is Increasing

The growth in unpaid operating debt is particularly concerning, he added.

“Perhaps they're having some difficulty because of tight cash flow or low cash flow in repaying operating debt in a timely fashion," Langemeier said.  "You can see that this has been a bit of a roller coaster over time. It was 35% in ’20. It dropped all the way to five percent in January ’23. It increased to 17% and 23% in ‘24 and ’25, and then in January of ’26, that increased to 31%, which is slightly lower than the 2020 number, but pretty high compared to what it was even last year, and particularly high compared to what it was in ’23. And so, if you're increasing the size of your operating room primarily due to unpaid debt, that's probably a signal that we're seeing more financial stress here in early ‘26 than certainly what we saw in ‘23 and ’24, and so financial stress appears to be increasing.”

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