MINNEAPOLIS, MN – Agricultural credit quality is drawing increased concern among bankers in the Federal Reserve Bank of Minneapolis district, even as overall banking conditions remained relatively stable during the second quarter.
The Minneapolis Fed surveyed 84 bankers across Minnesota, Montana, North Dakota, South Dakota, northwestern Wisconsin and Michigan’s Upper Peninsula. Forty-one percent of respondents flagged possible deterioration in agricultural loan quality, making farm lending one of the areas drawing the most scrutiny.
Bankers pointed to uncertainty over commodity prices, input costs and farm profitability, particularly in row crops. Some cow-calf operations were borrowing less because stronger cattle returns allowed producers to fund operating needs through livestock sales.
Agricultural loan demand was mixed during the survey period, with 20% of bankers reporting an increase and 16% reporting a decline. Looking ahead, 35% expect agricultural loan demand to increase over the next 12 months.
The report says operating loan renewals heading into 2027 could receive closer review as lenders watch repayment capacity and farm financial conditions.
Farm-Level Takeaway: Row-crop producers may face closer lender scrutiny heading into 2027 as concerns about agricultural loan quality increase.
(Tags: Farm Credit, Agricultural Lending, Farm Loans, Row Crops, Cattle, Federal Reserve Bank of Minneapolis, Farm Economy)
Focus Keyphrase: Farm Loan Quality
Meta Description: Minneapolis Fed bankers report rising concern about agricultural loan quality as row-crop profitability weakens and 2027 operating renewals approach.