Wisconsin farmers and producers across the Midwest had more debt and less capital to start the year, increasing the stakes for the 2025 crop.
The Federal Reserve Bank of Chicago, which covers southern and eastern Wisconsin along with states like Illinois and Iowa, and the Federal Reserve Bank of Minneapolis, which represents western and northern Wisconsin in addition to Minnesota and the Dakotas, surveyed agricultural lenders about farm credit conditions and land prices for the first quarter of the year.
Both surveys found demand for operating loans was higher compared to the first quarter of 2024, indicating farms had less cash available to start the growing season. About one-third of surveyed bankers in each region reported more farmers were looking to renew or extend an existing loan, and loan repayment rates were down.
Rene Johnson, senior vice president of agriculture banking at Lake Ridge Bank in south central Wisconsin, said lower profits at the end of the 2024 season meant many of the farms she works with had carryover debt. But she said producers were able to address it, either by working with the bank or selling off less productive assets.
“Farmers seem more focused on their financials,” Johnson said. “They’re more open to marketing their grain to protect their break-evens or be able to lock in a profit (for the 2025 crop). And another thing that we have noticed is they’ve increased their crop insurance usage.”
Johnson said producers are taking a more conservative approach, with most reporting no plans for major purchases or investments this season. She said the change is driven by the uncertainty around crop prices and exports amid President Donald Trump’s use of tariffs on top U.S. trading partners.
Joe Mahon, regional outreach director for the Federal Reserve Bank of Minneapolis, said during a webinar Friday that while tariffs are top of mind for both farmers and bankers, the deterioration of credit conditions on farms precedes the current trade conflicts.
“We’ve seen farm incomes declining for the last couple of years,” Mahon said during the presentation. “I wouldn’t look at what’s happened over the last quarter as being in some way any dramatic departure from the trend that we’ve seen over the last couple of years.”
But not all commodities have faced the same challenges. Johnson said milk prices have held mostly steady, despite a slight drop this spring, and demand for beef has been especially strong.
“[The beef market] has been hot and continues to be hot, and that’s a nice place for our dairy farmers to pick up some extra profits as well,” she said. “If they have bull calves to sell or cull cows or even replacements for other dairy farmers, they’ve been able to almost find another income generator by selling cattle off the farm.”
While farm income may be down, the price of farmland has remained strong across both reserve districts covering Wisconsin. The Minneapolis Fed reported a nearly 5 percent increase in land values from the first quarter last year, while the Chicago Fed reported a one percent increase. Both reports showed Wisconsin with stronger increases than neighboring states.
Mahon said during the webinar the continued growth may be a sign of “underlying confidence in the long term prospects of agriculture in the district” despite current commodity prices.
In south central Wisconsin, Johnson said farm real estate is still changing hands, allowing land to hold its value.
She said how farm balance sheets look by the end of 2025 will not only depend on the future of tariffs, but also on how weather impacts this year’s growing season. Many areas of the state have not gotten enough precipitation to get crops started, Johnson said, and some farms in the southern region have even been forced to replant crops due to dry conditions.
This story was republished with permission from Wisconsin State Farmer
