The Good and the Bad: What A Recent Survey Says About the Ag Economy

The Minneapolis Federal Reserve Bank keeps a close eye on what is happening in the agriculture economy throughout the year, and right now it says there is pessimism about farm income and spending among the people who loan farmers money. 

Four times a year, the bank puts out its Ag Credit Survey, asking lenders what they see happening right now in the states of Minnesota, Montana, North Dakota, South Dakota, and Wisconsin. Those states make up the Ninth District.

The survey relies on bankers sharing everything from trends in farm income and spending, to loans and repayment rates. The latest report showed that agricultural incomes and capital spending continued to decrease in the first quarter across the district

Farm Income and Spending Dropped in 2025

Overall, lenders agree farm income fell in the first three months of 2025 compared with the same period a year earlier. Eighty percent of respondents indicated that incomes decreased in the first quarter of 2025 compared with the same period a year earlier. 

Nearly the same amount reported capital spending had fallen, too. Seventy percent of respondents reported decreased capital spending.

But the news wasn’t all bad. 

• The share of respondents reporting increased or stable incomes was greater than the previous two quarters. 

• According to the survey, the small improvement may come from animal products, especially the cattle market.

• Investment in equipment and buildings by farm operations fell, according to a majority of respondents.

• Household spending by farmers increased slightly. 

Loan Demand Rises in Ninth District

• Bankers reported that credit demands grew, which was expected given constrained cash flow. 

• Two-thirds of respondents indicated increased loan demand in the first quarter.

• The uptick in loan demand may also be due to some interest rate relief for farm borrowers.

• Average interest rates decreased slightly for all fixed and variable loan categories.

• One-third of respondents said renewals or extensions of existing loans increased.

• The rate of loan repayment on farm loans decreased according to 52% of lenders.

• 22% of banks increased the amount of collateral required on farm loans relative to a year ago.

Land Values and Cash Rents

Land values continued to grow in the Minneapolis Federal Reserve Bank’s District.

• Nonirrigated cropland values went up by 4 % compared to a year ago.

• Irrigated cropland values rose by 7%.

• Ranch and pastureland values climbed 8%.

The survey showed that while farmland values increased, farmland cash rents declined.

• Nonirrigated land rents fell by 1%. 

• Irrigated land rents decreased by 5%.

• Ranchland rents were unchanged.

RELATED: This is what the Kansas City Federal Reserve said drove down farmland values in its Tenth District which includes Kansas, Missouri, Nebraska, Oklahoma and the Mountain States of Colorado, northern New Mexico, and Wyoming. 

Minnesota Federal Reserve Bank Farmland Outlook

According to the survey, the outlook was generally negative. 

• 70% of respondents predicted that farm income will decrease in the second quarter from the same period last year.

• 67% say capital spending will be down.

• The outlook for household spending is flat.

• Respondents expect an uptick in borrowing this year.

• 65% forecast loan repayment rates to decrease. 

• Nearly a quarter of bankers expect to increase collateral requirements for borrowers. 

The report went on to say some lenders were concerned about the longer-term viability of farm operations, especially those that weren’t diversified. “The farmers with crops-only are suffering this year,” commented a North Dakota banker. “If prolonged into 2026, we could see some fail.”

RELATED: This is why wind power has been a priority in Minnesota.