McLEAN, VA – The Farm Credit System remains financially sound, but credit risk is rising as tougher farm and economic conditions pressure some producers. The Farm Credit Administration board received the update at its June 11 meeting.
The System reported stable earnings and stronger capital for the quarter ending March 31. Total capital reached $86.4 billion, up 7.3 percent from a year earlier.
Loan quality remains solid overall, but stress indicators increased. Nonperforming assets rose to 1.09 percent of loans outstanding and other property owned, compared with 0.96 percent a year earlier.
The broader farm economy remains mixed. FCA says the Middle East conflict is driving energy volatility and inflation pressure, while consumer spending weakens and loan delinquencies rise. Net farm income is expected to decline in 2026, though federal support keeps it above average.
Crop returns may improve modestly, while livestock returns remain strong despite drought concerns. Farmland values have stabilized, but softer cash rents and regional drought remain risks.
Farm-Level Takeaway: Producers should watch credit conditions, energy costs, and repayment capacity as farm income softens.