The Farm Credit System remains financially sound, but federal regulators say financial stress continues to build across the agricultural economy.
The Farm Credit Administration said higher production expenses are pressuring producers and tightening profit margins. Weather and geopolitical supply disruptions have created some marketing opportunities that could improve liquidity for crop producers this fall, while profitability in the livestock sector has been mixed.
Farmland values also continue to rise despite relatively weak farm returns in recent years.
During the first six months of 2026, the Farm Credit System reported modest loan growth, increased earnings and sound capital levels. Regulators said overall loan quality also remained solid.
However, nonperforming assets increased to 1.09% of outstanding loans and other property owned as of June 30. That was up from 1.02% one year earlier.
The Farm Credit Administration said the increase is another sign that agricultural credit risks are trending higher as farmers and ranchers contend with elevated operating costs and narrower margins.
The Farm Credit System is a nationwide network of financial institutions that provides loans and other financial services to farmers, ranchers, agricultural businesses and rural communities.