What Does Credit Say About The Farm Economy?

Ask anyone who has been farming for some time, and they’ll tell you that credit is an essential part of agriculture, helping farmers manage costs and invest in their operations.  But as borrowing costs rise, what does increased reliance on credit say about the overall health of the farm economy?

“Farming is obviously a very expensive industry, so it takes a lot of money to put a crop in the ground, and it takes a while for farmers to get that money back and sell it in the marketplace," noted American Farm Bureau Federation Economist Faith Parum.  "And farm credit is one of the ways that they get around that. So, taking out loans and things to make sure that they have the capital needed to put that crop in the ground and wait, you know, some places years to get that money back.”

Parum added credit can also offer clues about broader economic conditions in agriculture.

“Using credit doesn't mean necessarily that the farm or the farm economy is in bad financial health, but something we do look at is the amount of debt farms are taking on," she said.  "USDA actually says that this is the highest interest rate expenses in 2026 dollars that they've ever estimated. So, you know, taking on debt is not a bad thing, but we want to make sure it's in a sustainable manner.”

As producers face higher expenses and increased borrowing costs, Parum said an updated Farm Bill would help ease that financial strain.

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