The Economic Future of Agriculture

With 2025 in the rearview mirror, what’s ahead for farmers and landowners in 2026? That question can cause anxiety for those who make their living off the land. 

Jim Knuth, senior vice president of lending in Iowa for Farm Credit Services of America, said that when he looks at what happened last year, there is reason to be cautious—but also optimistic.

Knuth spoke during one of the breakout sessions at the Land Investment Expo held earlier this month in Des Moines, Iowa. 

Here are some of the highlights from his presentation:

Landowners and Land Values

Knuth reminded the audience that land values in Iowa continue to remain stable, despite struggling commodity prices. He also discussed who purchased land in 2025.

• Farmers and ranchers continued to be the largest buyers, accounting for 79% of farmland purchases in Iowa in 2025. 

• Local investors made up 4% of transactions. 

• Out-of-area investors accounted for 6% of land deals. 

• Land value stability has been a true gift during this economic cycle. 

• This contrasts with the 25% decline that followed the ethanol boom cycle that peaked in 2013 after nearly a decade of growth. 

• Land value stability is the best outcome that could be hoped for during an economic downturn.

  
  

RELATED: The latest 2025 Iowa State Land Values Survey shows why farmland remained stable but land quality creates a divide in market conditions.    

The U.S. National Debt

Knuth said the dual mandate of the Federal Reserve—fighting inflation and supporting employment—is becoming a triple mandate with the addition of financing the national debt, which is approaching $38.5 trillion. 

He shared this forecast for interest rates in 2026:

• Short-term interest rates are expected to decline moderately in mid to late 2026.

• Long-term rates will likely remain stable or increase slightly. 

• A new Federal Reserve leadership structure could have a significant impact on interest rates and financial markets. 

• Producers should consider refinancing long-term debt if rates stabilize or decline.

Managing Farm Operations

According to Knuth, the most common question Farm Credit Services received from producers in 2025 was how to best manage their operations. 

He offered the following recommendations:

• Working capital is a critical component and should equal 20% of the value of farm production.

• Sustainable debt levels are important. Machinery and equipment payments should be less than 10% of gross revenue per acre.

• Operations with sustainable debt levels and diversified income streams are generally healthier and more resilient.

  
  

RELATED: Here is a look at why farm bankruptcies were climbing last year and some of the other fallout from the 2025 economic conditions. 

Equity and Loan Sustainability

As the leader of Iowa lending operations for Farm Credit Services of America, Knuth says he has a unique perspective on Upper Midwest agriculture and offers advice drawn from years of helping farmers manage operating expenses.

Among Knuth’s recommendations:

• Do not overextend loans based on balance-sheet equity.

• Fixed cost adjustments—including loans, rent, and machinery—should be evaluated regularly. 

• In some cases, difficult decisions may be necessary, such as selling or renting land. 

• Knuth warned against collateral-based lending.

• Capacity-based lending is often the better option.

• Carefully evaluate the need for new loans.

Iowa Farmland Values

Knuth said that despite the ups and downs of making a living off the land, Iowa remains a strong place to farm and own land.

“At the end of the day, Iowa is one of the most abundant, productive, and stable agricultural regions in the entire world,” he told the audience.

He also reminded attendees of an economic reality as they navigate today’s farm economy. “Grain production agriculture has historically adjusted to market realities over the last 100 years,” Knuth noted.