MINNEAPOLIS, MN – Higher input costs and weak crop prices are pushing Northern farm borrowers toward credit as the growing season begins. Federal Reserve Bank of Minneapolis economist Joe Mahon reports farm income, capital spending, and repayment rates declined across the Ninth District during the first quarter.
More than 75 percent of agricultural lenders reported lower farm income than the previous year. Capital spending fell, according to 65 percent of respondents, as grain operations faced pressure from fertilizer and fuel costs despite strong 2025 yields.
Credit needs are rising. Forty-six percent of lenders reported increased loan demand, nearly half reported more renewals or extensions, and 48 percent reported lower repayment rates. Twenty-four percent increased collateral requirements.
Land values continue masking some stress. Nonirrigated cropland values fell less than 1 percent, while irrigated cropland rose 1.4 percent and ranchland increased more than 3 percent, supported by cattle profitability. Cash rents declined across all land types.
Bankers remain cautious. About half expect farm income to decline further, while more than half expect loan demand to rise and repayment rates to weaken.
Farm-Level Takeaway: Crop producers face mounting credit pressure as high input costs and low prices weaken cash flow despite stable land equity.