Working Smarter in a Leaner Season: A Realistic Look at Farm Finance
The March 2025 Ag Economists’ Monthly Monitor* offers a valuable snapshot of industry sentiment, and many are pointing to early signs of an ag recession in row crop sectors. Commodity prices, especially for cotton, wheat, and to a lesser extent, corn and soybeans, have softened while input costs remain high. That margin squeeze is showing up in balance sheets throughout the Midwest and Southern Plains.
Still, it’s important to distinguish between a recession in a segment or a collapse across the broader ag economy. Permanent crops, livestock, and diversified operations are faring differently. Credit markets haven’t seized up, they’ve become more selective. That’s not dysfunction. It’s discipline.
Lenders Are Worried, But They’re Still Lending
With talk of an ag recession picking up, lenders are right to be cautious. Working capital is shrinking, and operators who took advantage of low rates in 2020–2021 are in a better spot than those now facing higher variable rates or maturing interest-only terms.
But we’re not seeing widespread credit denials. What we’re seeing is tighter underwriting, more rigorous stress testing, and a closer look at farm management practices. From a private ag lending perspective, it’s less about pulling back and more about partnering intentionally.
Capital is still being deployed, but primarily to operations with a clear plan and operational discipline. It’s not about how many acres you work. It’s about how well you manage them.
“We’re not pulling back; we’re just getting more intentional. If a borrower knows their numbers, has a plan, and isn’t afraid to talk through tough spots, we’re a great resource for capital”
Joe Erickson, Conterra Relationship Manager
→ For a deeper look at how the lending landscape is shifting, see Understanding the Ag Lending Pullback: What Farmers Must Know.
Consolidation Isn’t New, But the Drivers Have Changed
Consolidation in ag is nothing new. It’s been part of the landscape for decades. But what’s changed is the why. It’s no longer just about efficiency or scale; it’s increasingly about financial survival.
“The farms that are growing right now aren’t always the biggest, they’re the ones making smart, lean business decisions. That’s who’s earning trust with banks and lenders,” Erickson continued.
Operators without land equity, diversified income streams, or strong financial records are finding it harder to access capital. And the lack of a new farm bill paired with continued input cost pressure will only accelerate that trend.
But consolidation isn’t inherently negative. It often signals a realignment toward stronger operators, those with better planning, leaner operations, and sounder risk management. In many cases, landowners are shifting toward tenants who run the business like a business. That will shape the future of the sector, not necessarily shrink it.
→ Learn how producers are staying resilient in tough times by reading Staying Strong: Farming Amidst Economic Headwinds.
Real Estate Still Matters
Let’s be clear: land equity is still one of the strongest tools farmers have in a downturn. Ag lenders are still lending, especially to operators who know how to leverage owned assets or structure creative partnerships with landowners.
Timing is key. The producers doing best right now are the ones who used recent profitable years to pay down debt, reinvest in efficiency, or refinance early. Those waiting until the situation becomes urgent are now seeing tighter terms and fewer options.
“When you’ve got land equity, you’ve got options – but timing matters. The earlier we’re in the conversation, the more flexibility we can offer. And that can be the difference between staying stable or scrambling later,” concluded Erickson.
Especially during ag recession and realignment, the operations that plan ahead are the ones most likely to stay steady.
→ For smart strategies on refinancing and restructuring, explore Maximize Growth with Ag Loan Refinance and Debt Restructure.
This Is a Time for Discipline, Not Panic
Yes, there’s pressure on the row crop side of the ag economy. Margins are thin, consolidation is picking up, and federal policy is lagging behind. But this isn’t the ag crisis of the 1980s. There’s still capital available. Land values are still firm. And smart operators, the ones tracking their numbers and maintaining strong lender relationships, are still getting deals done.
→ Not sure where you stand? Stress Testing Your Farm: 4 Essential Steps offers a practical way to assess your operation’s resilience.
The ag economy is shifting. But those who are willing to adapt are the ones who’ll be in position to thrive.
Conterra Ag Capital is a private lender, focused exclusively on American agriculture. We offer a variety of
specialized ag loans tailored to meet the specific needs of farmers and ranchers nationwide. With
a team of experienced relationship managers, including Joe Erickson, we provide regional expertise and personalized service to our clients. Whether you’re a seasoned producer or new to the industry, Conterra is committed to supporting your agricultural endeavors. Our people, products, and process-driven approach to lending makes us unique. Find your Conterra relationship manager here: Find an Ag Lender – Conterra Ag Capital
Disclaimer: Please note that the information provided in this article is for educational and informational purposes only, and should not be construed as financial or investment advice. While we have made every effort to ensure the accuracy and reliability of the information presented, Conterra Ag Capital and its affiliates make no representation or warranty as to the completeness, correctness, timeliness, suitability, or validity of any information contained in this article. You should always consult a qualified financial advisor, tax professional, or other qualified professional for advice on your specific financial situation.
*Additional Disclaimer: This article references insights from the March 2025 Ag Economists’ Monthly Monitor, New Warning Signs Agriculture is in a Recession, published by Farm Journal. Interpretations and commentary presented here reflect the author’s independent analysis and do not represent direct quotes or endorsements from survey participants or Farm Journal.
