WASHINGTON - U.S. farm-sector debt is forecast to reach a record $605.1 billion in 2026, but Agriculture Department officials say growing reliance on lenders outside the traditional banking system means the official figure may substantially understate how much money American farmers actually owe.
The U.S. Department of Agriculture's Economic Research Service estimates farm debt will increase by $26.4 billion this year, or 4.6%, from 2025.
After adjusting for inflation, USDA expects farm debt to increase 1.5% during 2026.
The official total includes hundreds of billions of dollars in real estate and operating debt, but an increasing amount of financing is coming from suppliers, agricultural cooperatives, equipment manufacturers, financial technology companies and other lenders that can be more difficult for federal statisticians to track comprehensively.
USDA officials told Reuters the department has begun new research aimed at measuring that borrowing and determining whether gaps in existing data are masking greater financial stress across American agriculture.
The issue is increasingly important because some farmers are turning outside the conventional banking system as years of narrow crop margins, elevated production expenses and tighter credit place pressure on operating finances.
A record $605.1 billion in measured farm debt
USDA's latest farm-sector balance sheet forecasts total debt of $605.1 billion for 2026.
Farm real estate debt is expected to reach approximately $399 billion, up 4.6% in nominal terms from 2025.
Non-real-estate farm debt, which includes many operating and equipment obligations, is forecast at approximately $206.1 billion, an increase of 4.4%.
Debt is growing faster than the overall value of farm-sector assets.
USDA forecasts farm assets at approximately $4.47 trillion in 2026, a 3.0% nominal increase from the previous year.
Farm-sector equity is forecast at approximately $3.86 trillion, up 2.7% in nominal terms but slightly lower after accounting for inflation.
The sector's debt-to-asset ratio is expected to rise from 13.34% in 2025 to 13.54% in 2026.
Those figures indicate that the agricultural sector as a whole remains heavily backed by valuable land and other assets, but USDA says solvency is expected to weaken modestly because debt is growing faster than assets and equity.
The official number may not tell the entire story
The larger concern now emerging is whether the federal government's measurements fully capture newer forms of agricultural credit.
Traditional agricultural debt is relatively well documented through commercial banks, the Farm Credit System, government lending programs and other established financial institutions.
But farmers can also finance seed, fertilizer, chemicals, machinery and other operating expenses directly through vendors and suppliers.
Some agricultural cooperatives provide credit to their farmer-members, while equipment companies and financial technology firms increasingly offer their own lending products.
Those obligations do not always appear as clearly in the data sources used to construct USDA's national farm balance sheet.
Jeffrey Hopkins, acting assistant administrator at USDA's Economic Research Service, told Reuters that the agency is trying to gain access to information from lenders that have emerged outside the traditional sources it has historically tracked.
USDA is cross-checking farmer survey responses against Farm Service Agency loan records and supporting additional research into the size of the nontraditional agricultural credit market.
Officials said the department hopes that work will produce better estimates within approximately two years.
Researchers see a potentially large measurement gap
Jenny Ifft, an agricultural finance professor at Kansas State University who is working on USDA-supported research into nontraditional farm lenders, told Reuters that debt held by some lenders may be significantly greater than current federal estimates indicate.
Ifft estimated that there could be two to three times as much debt as USDA currently records in its category for individuals and other lenders.
USDA placed that category at approximately $45 billion in 2025.
That does not mean total U.S. farm debt can simply be multiplied by two or three.
The estimate applies to a particular lender category and illustrates the potential size of the measurement gap rather than establishing a new national farm-debt total.
Neither USDA nor the researchers have yet produced a definitive estimate for how much additional debt is missing from the $605.1 billion forecast.
If the category is materially understated, however, tens of billions of dollars in additional obligations could potentially sit outside the clearest federal measurements of agricultural leverage.
Vendor credit use is expanding
The growth of vendor financing provides one indication of how quickly agricultural lending is changing.
Wesley Davis, a partner at Meridian Agribusiness Advisors, told Reuters that roughly half of U.S. commercial farms relied on vendor or nontraditional lenders to help cover operating expenses during the most recent season.
Davis said that represented an increase of approximately 10% from a year earlier.
Vendor financing can allow farmers to obtain seed, fertilizer, crop protection products, machinery or other necessities without relying entirely on a conventional operating loan from a bank.
That can provide important flexibility, particularly when traditional lenders tighten underwriting standards or when a producer needs additional financing during the growing season.
It can also make the overall debt picture more difficult to measure when credit is spread across numerous suppliers and financing companies.
Land O'Lakes illustrates the scale of the shift
One example cited by Reuters is Land O'Lakes, the Minnesota-based agricultural cooperative.
Chief Executive Beth Ford said the cooperative's financing operation had grown from roughly $100 million in committed loans last fall to more than $1 billion in commitments for the 2027 crop year.
Committed credit does not necessarily mean that the entire amount has already been borrowed.
The scale of those commitments nevertheless illustrates the demand for financing outside conventional farm banks.
For producers, supplier financing can serve as another source of working capital at a time when the cost of seed, fertilizer, fuel, machinery and other agricultural inputs remains elevated.
Pressure has been building across farm country
The increase in borrowing follows several difficult years for parts of the farm economy, particularly crop producers.
The Federal Reserve Bank of Kansas City said persistent weakness in the crop sector has continued to pressure farm finances as production costs remain elevated relative to commodity prices.
Federal Reserve agricultural credit surveys have also shown stronger demand for farm loans, slower repayment rates in some regions and a gradual tightening of credit conditions.
The Kansas City Fed reported in September that growth in farm debt remained strong during the first half of 2026 and that liquidity at agricultural banks had tightened gradually.
At the same time, the central bank said aggregate financial conditions remained resilient and farm loan delinquency rates were unchanged from a year earlier.
That distinction is important.
Rising debt does not by itself mean American agriculture is experiencing a systemwide financial crisis.
Farmland values remain strong, many livestock producers have benefited from favorable cattle revenues and government payments have provided support to some operations.
USDA also forecasts farm-sector assets at nearly $4.5 trillion, leaving aggregate leverage well below levels that would indicate the sector as a whole is insolvent.
Farm bankruptcies are rising
Other indicators nevertheless show increasing financial strain among some producers.
Federal court data show 336 Chapter 12 bankruptcy cases were filed during the 12 months ending June 30, 2026.
Chapter 12 is a form of bankruptcy specifically designed primarily for financially distressed family farmers and fishermen.
The 336 filings represented an increase from 282 during the comparable 12-month period a year earlier.
That amounts to an increase of roughly 19%.
Broader business bankruptcy filings also increased during the period, although farm bankruptcies remain far below levels recorded during earlier periods of severe agricultural distress.
Researchers have also begun combining Chapter 11 and Chapter 12 agricultural filings to develop a more complete picture because not every financially distressed agricultural business qualifies for or chooses Chapter 12.
Weak cash margins are driving demand for credit
USDA forecasts net farm income, a broad measure of agricultural profits, at $158.4 billion in 2026.
That would represent a 2.6% nominal decline from 2025 and a 5.5% decrease after adjusting for inflation.
The financial picture varies significantly depending on what a farm produces.
Crop farms have faced several years of narrower margins as commodity prices retreated from earlier highs while expenses for fertilizer, fuel, machinery, labor, interest and other inputs remained elevated.
Higher financing costs can compound those pressures because farms frequently rely on operating credit before crops are harvested and revenue arrives.
Farmers with limited working capital may therefore need to borrow more even if their underlying acreage or production does not increase.
USDA forecasts working capital across the sector will improve 3.5% in nominal terms in 2026, but that follows a 15% decline during 2025.
Why missing debt matters
The difficulty measuring nontraditional credit creates a problem for economists, lenders and policymakers attempting to determine how much financial stress exists in agriculture.
A farm with manageable bank debt could appear relatively healthy in conventional lending data while also carrying significant obligations to suppliers, equipment companies or other creditors.
That could make debt-service burdens more difficult to evaluate and could leave policymakers with an incomplete picture of which operations are financially vulnerable.
USDA officials are also examining whether agricultural credit problems could eventually create effects outside the farm sector.
There is currently no evidence that farm debt poses a systemic threat comparable with the credit problems that preceded the 2007-2010 financial crisis.
The concern raised by USDA is instead about visibility: financial risks are more difficult to evaluate when a growing portion of borrowing is not captured consistently.
Improved data could help identify whether nontraditional lending is primarily providing healthy additional liquidity or allowing financially stressed farms to accumulate obligations that would otherwise be visible to conventional lenders.
Traditional lenders remain important
Commercial banks and the Farm Credit System remain major sources of agricultural credit.
Kansas City Fed data show agricultural banks continued to experience strong loan demand during the first half of the year.
The Fed said non-real-estate farm debt continued to grow strongly at agricultural banks while farm real estate lending increased across a broader range of institutions.
Despite increased borrowing, delinquency rates at agricultural banks remained relatively low and were unchanged from a year earlier.
That suggests the current deterioration in farm credit conditions remains gradual rather than abrupt.
The growth in vendor and nontraditional financing, however, means bank data alone may no longer provide a complete picture of how much leverage individual farm operations are carrying.
What happens next
USDA is now attempting to close that information gap through new research, cross-checking survey responses and studying the rapidly expanding nontraditional agricultural lending market.
The department's next regular farm income and balance sheet forecast is scheduled for Dec. 2.
For now, the official picture shows a farm sector with substantial assets, relatively modest aggregate leverage and historically low levels of delinquency, but with debt rising faster than assets and financial conditions weakening for some producers.
The unanswered question is how much additional borrowing exists outside the traditional lenders that federal agencies have historically been able to measure.
The $605.1 billion USDA forecast therefore represents the clearest official estimate of U.S. farm debt, but it may no longer represent the complete financial exposure of American agriculture.