American farmers are experiencing unprecedented levels of debt, with the agricultural sector's total debt expected to exceed $605 billion by 2026, according to the US Department of Agriculture (USDA). This represents a significant increase of over 100% since 2000, when the debt was around $300 billion. The rising costs of inputs, declining crop prices, and trade disputes with major buyers, particularly China, have contributed to the growing financial pressures on farmers.
The USDA's estimates may not fully capture the extent of the debt, as farmers are increasingly relying on non-traditional credit sources, such as suppliers, agricultural cooperatives, equipment manufacturers, and financial technology companies. These alternative lenders are not always accounted for in official data, making it challenging for the government to accurately assess the sector's debt. Jeffrey Hopkins, acting assistant director of the USDA's Economic Research Service, noted that the emergence of new lenders requires the department to explore new methods for accessing their data.
According to Jenny Ifft, a professor of agricultural finance at Kansas State University, the debt owed to non-traditional lenders could be two or three times the USDA's estimate of $45 billion in 2025. This trend is reflected in the growing credit facilities offered by companies like Land O'Lakes, which has increased its lending from $100 million to over $1 billion for the 2027 crop season. The rising reliance on non-traditional lenders is a concern for the USDA, as it may not be able to accurately track the sector's debt.
Many commercial farmers are turning to non-traditional lenders to finance their operations, with around 50% of commercial farms using supplier credit or alternative lenders for operating expenses in the previous season. This represents a 10% increase from the previous year, according to Wesley Davis, a partner at Meridian Agribusiness Advisors. The growing dependence on non-traditional credit sources is a challenge for the USDA, as it seeks to monitor the sector's debt.
The USDA faces additional challenges in tracking farm debt, including declining response rates to its surveys. The response rate to the Agricultural Resource Management Survey, which is used to measure supplier credit, has fallen from around 68% in 2009 to approximately 33% in 2025. Interviews with over 52 commercial farmers in seven states across the Midwest and Southern US revealed that many farmers have multiple lines of credit, with some having over 30 separate lines and one family in Iowa having 42 lines.
A 2024 study that examined over 4.4 million agricultural equipment loans in 14 states between 2001 and 2019 found that debt owed to non-traditional lenders may be four times larger than the USDA's estimates. The study's findings highlight the need for more accurate data on the sector's debt. The USDA is currently working on research projects to compare farmer survey data with loan records from the Farm Service Agency and measure the size of the non-traditional lending market.
Economists warn that the growing gap in farm debt could have far-reaching consequences, not only for farmers but also for suppliers, equipment dealers, and the broader agricultural business community. If left unchecked, the financial pressures on farmers could lead to increased risks for the wider economy, particularly if loans are not secured by assets. The USDA and other stakeholders must work together to address the challenges facing the agricultural sector and find solutions to the growing debt problem.
Key points
- The US agricultural sector's total debt is expected to exceed $605 billion by 2026.
- Non-traditional lenders, such as suppliers and financial technology companies, are increasingly providing credit to farmers.
- The USDA faces challenges in accurately tracking the sector's debt due to declining response rates to surveys and the growing reliance on non-traditional credit sources.
