The USDA projects that U.S. farm sector debt will reach a record $605.1 billion in 2026, a 4.5% nominal increase. Net income would fall 2.6% to $158.4 billion, while the USDA investigates non-traditional credit.
The U.S. Department of Agriculture (USDA) projects that U.S. farm sector debt will reach a record $605.1 billion in 2026, a nominal increase of 4.5% from 2025 and 1.5% adjusted for inflation, according to its latest forecast.
Farm real estate debt would reach $399.0 billion, a 4.6% nominal increase (1.6% in inflation-adjusted terms), while non-real estate debt would stand at $206.1 billion, a 4.4% nominal increase (1.4% in real terms), USDA's Farm Income Team reported.
The USDA warns that the sector's solvency would deteriorate in 2026. "Farm sector solvency is forecast to worsen in 2026 relative to 2025, with debt forecast to grow at a faster rate than assets or equity," the Farm Income Team said. The debt-to-asset ratio would go from 13.34% in 2025 to 13.54% in 2026.
On liquidity, working capital would increase 3.5% in nominal terms in 2026, after falling 15% in 2025. However, other measures, such as the debt service ratio, show liquidity worsening in 2026, the USDA said.
USDA projections indicate that farm production expenses will reach $492.8 billion in 2026, up 4.5% from the previous year. In contrast, net farm income would fall to $158.4 billion, a nominal decrease of 2.6% and 5.5% after adjusting for inflation.
For producers, these trends mean that financing decisions must increasingly take into account the elevated costs of fertilizer, fuel, labor, land and equipment, along with uncertainty in commodity markets.
Growing borrowing from non-traditional lenders is creating gaps in the official capacity to measure farm credit. According to Reuters, American farmers are borrowing more money than ever before to operate, but the boom in vendor and non-traditional credit makes it harder for the federal government to track farm debt.
Farmers are increasingly turning to suppliers, farmer cooperatives, equipment manufacturers, financial technology firms and other non-traditional lenders, whose credit is more difficult to measure comprehensively. In response, the USDA launched research projects to better track that debt and to understand whether financial stress in agriculture could affect the broader economy. "There are new lenders popping up and we need to find ways to access that data," Jeffrey Hopkins, acting assistant administrator of USDA's Economic Research Service, told Reuters.
