For its latest quarterly release, the report from the Rural and Farm Finance Policy Analysis Center shows the leading indicators for the farm sector’s financial health all show elevated risk. The bottom line: The general farm economy’s financial health continues to deteriorate slightly.
This initiative tracks 14 data-driven financial indicators organized in four classes:
- Farmer and banker sentiment
- Farm income and balance sheet health
- Farm machinery market dynamics
- Credit quality
For the farm economy overall, on a scale of 1 (low risk) to 10 (high risk), it’s rated at 6.2.
This report amalgamates the market outlook, farm management or farm finance specialties of a panel of economists and provides a risk rating for each class as well as a momentum rating comparing a change in data values since the prior report. Read the full report here.
Where is the biggest deterioration?
Using data reported through early September 2025, the farm machinery market showed the biggest signs of deterioration.
The report authors point to the declining sales in used equipment as reported by the Association of Equipment Manufacturers in addition to financing performance data from leading manufacturer financing products.
What’s not obvious in the averages?
The authors say average risk ratings are comparable across the four indicator classes; however as farm debt grows, the average farm income varies by farm type. Most notably a separation in economic conditions and outlook for crops versus livestock.
Since 2022, the Federal Reserve Bank of Kansas City has reported via its lender survey weakening agricultural loan repayment rates.
For 2025, using the September 2025 forecast from the USDA Economic Research Service, corn farmers and specialty crop farmers will have a net cash income decline of 14.8% and 1%, respectively. Whereas, hog and dairy farmers increase net cash income 17.9% and 10.7%, respectively.
Looking out to 2030, the Agricultural and Food Policy Center (AFPC) at Texas A&M University also points to challenges in the crop markets, noting poor financial conditions for rice, cotton, feed grains and wheat, but dairy and cow-calf operations have “surer projected financial footings.”
