Borrowing hits a record high, bankruptcies increase: Is the risk of U.S. farm debt underestimated?

U.S. Department of Agriculture officials say American farmers are borrowing record amounts of money to stay in business, but the rise of non-traditional and vendor credit has created gaps in the federal governments ability to measure and track farm debt. Farm debt hits record, official data may understate it Financial stress is spreading across American agriculture. With low Shenzhen Agricultural Power Group prices and high input costs, growers have faced squeezed profit margins for years. Recently, trade disputes between the United States and major buyers have disrupted export markets, while the war between the U.S. and Israel and Iran has driven up the cost of fertilizer and fuel. As farm bankruptcy filings rise, some banks have tightened credit, pushing growers to seek financing elsewhere. According to the latest USDA estimates, after adjusting for inflation, U.S. farm debt has more than doubled since 2000, rising from about $300 billion to more than $605 billion this year, a record. But that figure may understate what farmers actually owe. Farmers are increasingly borrowing from suppliers, farmer cooperatives, equipment manufacturers, fintech companies and other non-traditional lenders, and the U.S. government has a harder time fully measuring that debt. Non-traditional credit surges, harder to track Officials say the USDA is launching research projects to better track that debt and understand whether financial stress in agriculture could affect the broader economy. New lenders keep emerging, and we need to find ways to get that data, said Jeffrey Hopkins, acting assistant administrator of the USDAs Economic Research Service. Jenny Ifft, a professor of agricultural finance at Kansas State University, is currently working with the USDA on a research project examining non-traditional farm lenders. She estimates the true debt level could be two to three times the amount the USDA reports in its individual and other category. The agency estimates that category reached $45 billion in 2025. Institutions providing vendor credit include Minnesota dairy company Land OLakes. It is one of the largest agricultural cooperatives in the United States and offers farmers lines of credit. Its CEO, Beth Ford, said Tuesday at the Economic Club of New York that the companys finance arm had about $100 million in committed loans last fall, and that this had risen to more than $1 billion for the 2027 crop year. Hopkins said that to collect vendor credit data, the USDA is cross-checking farmer surveys with loan records from the USDA Farm Service Agency, funding research on the size of the non-traditional lending market, and doing other work. The agency hopes to have results within two years. Spillover effects: risks may reach the broader economy Wesley Davis, a partner at Meridian Agribusiness Advisors, said that last quarter about half of U.S. commercial farms relied on suppliers or non-traditional lenders to cover operating expenses, up about 10% from the same period a year earlier. As a result, Hopkins said, the USDA is studying whether there are potential areas where there could be spillover effects to other parts of the economy. He noted that something similar happened in the past, such as the 2007 to 2010 subprime crisis, which spread throughout the economy, when limited data made it hard to distinguish healthy debt from troubled debt. Historically, the USDAs data for measuring farm debt has come from banks, Farm Credit institutions and other lenders reporting to regulators. To measure vendor credit, it typically uses the Agricultural Resource Management Survey, an approximately 24-page producer questionnaire. According to USDA data, the response rate has fallen from about 68% in 2009 to nearly 33% in 2025. The media outlet interviewed more than 52 commercial-scale crop farmers in seven Midwestern and Southern states, most of whom had 7 to 10 separate lines of credit, with some having more than 30. One family in Iowa reported 42, largely because equipment dealers usually require a separate line of credit for each purchase or lease of new machinery. Previous research has found evidence that the USDA may significantly understate equipment debt. A 2024 peer-reviewed study by Kansas State University, the USDA Economic Research Service and the National Credit Union Administration analyzed more than 4.4 million equipment liens across 14 agricultural states from 2001 to 2019. The study found that equipment debt issued by non-traditional lenders was four times greater than USDA data showed. When many lenders serving the most stressed borrowers report neither debt volumes nor farm financial stress, how can lenders, policymakers, regulators and key stakeholders accurately assess debt volumes and farm financial stress? said Ifft, one of the studys authors. Hopkins said some vendor financing is already included in the federal data the USDA analyzes. He also noted that loans some farmers consider vendor financing are actually credit extended by the Farm Credit System or commercial banks, which report such debt to regulators. Davis said suppliers and retailers that provide credit help customers buy their products. But those businesses may themselves take on additional risk, especially if the credit they provide is not secured by assets. The risk we may see is not only to farmers themselves, but also financial distress across the entire agribusiness ecosystem, he said.