Farm income and credit conditions continued to deteriorate in the second quarter but showed signs of moderating during the first half of 2026.
The average pace of decline in farm loan repayment rates over the past four quarters slowed across all participating districts during the second quarter. In the Minneapolis and St. Louis districts, the share of lenders reporting that repayment rates were lower than a year ago dropped from an average of around 50% in 2025 to approximately 30% in the most recent survey.
The decline in loan repayment rates slowed alongside less rapid tightening in farm finances. Farm income continued to soften but the pace of decline eased in recent quarters across all participating districts.
The share of lenders reporting that farm income was less than a year ago in the Minneapolis and St. Louis districts dropped from an average of around 90% in 2025 to about 60% in the most recent survey.
Financial challenges remained less pronounced in the Kansas City District where cattle revenues have been particularly supportive.
Alongside gradual weakening in farm finances, credit standards continued to tighten steadily. The pace of increase in collateral requirements was similar to recent quarters in most regions and was most pronounced in the St. Louis District. Nearly 30% of lenders in the St. Louis District reported that collateral requirements for farm borrowers were higher than a year ago, and that share was about 20% in all other regions.
Despite persistent tightening in farm financial conditions, agricultural real estate values remained strong and continued to provide support to many borrowers. The value of non-irrigated cropland across all regions increased by an average of approximately 2.5% from the previous year during the second quarter.
Despite softer conditions in farmland markets during the past two years, values remained more than 50% higher than in 2020 across most regions, and more than 80% higher in the Dallas District.
Ty Kreitman is an associate economist in the Regional Affairs Department at the Omaha Branch of the Federal Reserve Bank of Kansas City. In this role, he is a key contributor to the Center for Agriculture and the Economy, an initiative at the Kansas City Fed focused on strengthening the Federal Reserve’s ties to agriculture and rural communities through research, data, and industry engagement.