Farmers Face Uncertain Economic Outlook Amid Low Crop Prices
Despite an anticipated robust harvest for corn and soybeans, agricultural bankers in Wisconsin and neighboring regions harbor a bleak outlook for farm profitability by the end of 2025. This sentiment emerges from surveys conducted by the Federal Reserve Banks of Minneapolis and Chicago, which reveal tightening credit conditions in the third quarter.
According to the reports, farm lenders witnessed a downturn in loan repayment rates and a spike in demands for loan extensions and new credit. These trends are projected to persist into the year’s final quarter. A significant portion of respondents from one survey — over 80% — anticipate a decline in farm income compared to the previous year.
Joe Mahon, the regional outreach director for the Federal Reserve Bank of Minneapolis, attributed the drop in farm incomes to a continued slump in crop prices during a webinar. Mahon noted, “We’re seeing, overall, the market conditions are sort of dominating. Strong production should offset some of (the lower prices), so that’s good news to farmers. But we’re not necessarily seeing that balance out in terms of higher income because prices are so low.”
In southern Wisconsin, Rene Johnson, senior vice president of agricultural lending at Lake Ridge Bank, expressed that farmers are keenly waiting for the post-harvest balance sheet assessments. She pointed out that those who secured profitable sale prices early in the year or found cost-effective inputs will fare better amid the inflation-driven rise in labor, fuel, and equipment costs. “The profit margin is tighter than it has been in a long time,” Johnson remarked.
However, Johnson clarified that lower repayment rates or increased loan renewals do not necessarily imply financial distress. Instead, farmers are being prudent by making minimum loan payments and exploring additional income avenues, such as trucking services or cattle finishing. “They are being very creative and adding things that they can add easily to their farm without a lot of investment,” she explained.
The Federal Reserve Bank of Chicago highlighted that nearly half of surveyed bankers foresee an uptick in forced sales or asset liquidations within the next three to six months. An Illinois banker suggested that profit losses in 2025 might lead to “liquidation of farmland to inject additional working capital into farming operations.”
Despite these challenges, farmland values in the region have generally remained stable. In southern, central, and eastern Wisconsin, good farmland values have risen by 4% from the previous year. Conversely, western and northern parts of the state experienced a nearly 5% decline, though Mahon cautioned that lower survey response rates might skew these numbers. Johnson emphasized that the strong land values have been crucial for farms to maintain equity in tough market conditions. “There is still farmland selling, and there’s still qualified buyers out there who are able to buy it,” she noted.
