Then vs. Now: What Federal Reserve Bank of Minneapolis Reports Tell Us about Farm Future

Farm incomes have been falling throughout the Minneapolis Fed’s Ninth District; a trend bankers expected over the past year. Comparing the most recent report with one from a year ago spots trends that have unfortunately come to fruition for farmers in the region.

The Ninth District comprises Minnesota, Montana, North Dakota, South Dakota, and Wisconsin. The Minnesota Fed periodically surveys lenders in the Ninth District to measure what happened during the previous quarter and what could happen in the months ahead.

The most recent Ag Credit Survey for the second quarter found downward trends in several areas:

• Farm income – decreased

• Spending on capital equipment – decreased

• Farm household purchases – decreased

• Demand for loans – increased

• Loan repayments – decreased

• Loan renewals – increased

• Loan extensions – increased

• Cropland values – mixed

• Cash rents – decreased                                                                                                                  

Commodity Prices Challenge Farmers’ Livelihoods

Those trends earned this lede in the Ag Credit Survey’s Second Quarter summary:

“Weather this summer has been good for crop production in much of the Ninth District, but crop prices have not been friendly to farmers’ pocketbooks.”

A North Dakota farm lender highlighted the unfriendly factors in that community:

“High operating cost and lower grain prices are the biggest concern.”

That feedback from the North Dakota lender looked at one part, but responses from lenders across the Ninth District showed how widespread farm income declines were in the second quarter.

RELATED: This is what an Iowa lender was seeing when he talked with American Farmland Owner before the beginning of 2025.  

The Ag Credit Survey showed that incomes decreased between April and June for 81% of farm lenders. Only 2% reported that income rose. That growing gap extends what is now a two-year fall for farm incomes, according to the report.

With money tight and financial concerns growing, producers have chosen to continue to delay major purchases for their farms. The report showed that 69% decreased spending on equipment and buildings compared to a year ago. Just 10% reported that their spending increased.

Farmers Delay Big Purchases

Delaying purchases for household needs may be more challenging than putting off buying a new combine. About one-third of the lenders reported decreased spending on consumer spending, while 26% reported increases.

A Minnesota lender laid out the reality for many producers: “Prices are below break even for most producers. A majority will have to refinance.”

The bottom line for many of the lenders surveyed was that they expected farm income would continue to fall. The Ag Credit Survey found that 74% of lenders expect farm income to drop in the third quarter of 2025 compared to 2024’s third quarter. Only 10% expected to see income rise over that period.

Ag Credit 2nd Quarter 2024 Survey Showed Financial Strain Ahead

American Farmland Owner reviewed the Ag Credit Survey 2^nd Quarter 2024 Survey. That survey included a Minnesota lender who accurately forecast troubles.

“With declining grain prices and a poor crop in the field, 2024 is shaping up to be a below average year,” the lender said.

The Minnesota lender’s pessimistic expectations were similar to the majority of other lenders surveyed. In the Ninth District, 78% of lenders surveyed expected that farm income would decline in the third quarter of 2024, compared to the previous year compared to just 7% who expected farm income to increase.

The report summarized growing challenges for producers as reflected in the lenders’ responses:

“More than 75 percent of district lenders surveyed reported that farm incomes decreased in the second quarter of 2024 from the same period in 2023, compared with only 11 percent who reported increased incomes. Nearly half reported that capital spending decreased. In contrast, spending by farm households increased on balance, as 40 percent of survey respondents saw an increase compared with 15 percent who reported decreases.”

As the second quarter of 2025 turned into the third quarter, pessimism continues as farmers look at commodity prices at harvest time, interest rates, and whether they can expect any new trade agreements that can find additional export opportunities to help their bottom line.

RELATED: This agricultural finance industry veteran told American Farmland Owner early this summer what has his attention for the remainder of the year.