Not a 'crisis,' but Nebraska crop farm stress is 'building gradually,' according to Federal Reserve

A tale of two worlds continues to play out across Nebraska farms heading into 2026. Recent reports and analysis collected by the Federal Reserve in Kansas City show indications that Nebraska crop farmers are feeling more economic stress, while cattle owners continue to bask in a strong market.

Nathan Kauffman, senior vice president and Omaha branch executive with the Federal Reserve Bank in Kansas City, provided an update on ag economic conditions in a Thursday seminar hosted by the University of Nebraska-Lincoln Center for Agricultural Profitability. Kansas City’s Federal Reserve office is widely understood as the leading branch focused on agriculture and economic conditions in Nebraska.

Kauffman said profit opportunities for crop farmers – ag producers who harvest foodstuffs like corn, soybeans, sorghum and dry beans – remain narrow. It’s a sentiment many ag groups have voiced issues with as prices continue to lag and input costs on equipment and fertilizer are high. Crop farmers suffered significant blows in 2025 as the Trump administration picked trade wars with some of Nebraska’s biggest ag trading partners, including China, which is a big buyer of Nebraska’s soybeans.

Kauffman said government payments, such as the Farmer Bridge Assistance Program, are helping keep some farmers afloat, but that may not do much to offset the damage done.

“I think that the bigger concern, especially as you think about the end of 2026, is what these prices might look like as we’re going into 2027. Those [Bridge] payments are likely to be temporary. They’ll offset, I think, some of the losses, but those aren’t necessarily changing the fundamental structure of supply and demand in the markets, and at some point, you would expect that pressure to resurface.”

Kauffman said there’s been more demand for operating loans as commodity prices remain low and expenses are stubbornly high.

“It’s not leading to what we would call a crisis or something, where you’re seeing significant deterioration in credit quality,” Kauffman said. “It’s gradual. There’s a certain percentage of each lender’s portfolio where they’re showing some stress. There are some producers who are still doing okay, and there’s others that are facing a lot of stress.”

The Federal Reserve collects reports from surveys conducted with commercial banks that aim to get a snapshot of what industries are looking like – the pace of loan repayment, capital spending, renewals and extensions. So far, loan demand, loan renewals and loan extensions have all picked up in the last few years, which Kauffman said could indicate that borrowers are needing more in the way of financing.

The whole ag economic outlook still doesn’t show an alarming picture, according to the Federal Reserve. But certain trends are showing stress accumulating. For example, Kauffman said loan delinquency rates from commercial banks are showing a small increase over the last couple of years, but they still remain “pretty minor” and don’t compare to the level of stress seen ahead of the COVID-19 pandemic.

“The industry, in aggregate, is actually still in a pretty stable condition,” Kauffman said. “That’s not necessarily the picture you might hear elsewhere.”

Kauffman pointed to current land value as ag’s shining star. It can be a bellwether for the industry’s financial health, since it’s the largest asset for producers. Overall, ag land values haven’t seen much of a decline, thanks to the strong cattle market keeping the bigger picture balanced.

But there have been decreases in Nebraska ag land value, especially in central and eastern parts of the state that have more cropland. A Wednesday report from the Federal Reserve showed some states that dedicate more space to row crops, such as Nebraska, Kansas and Missouri, have seen land values slightly dip. And in March 2025, the University of Nebraska-Lincoln reported a 2% decrease in ag land value, with the average value of a Nebraska acre sitting at $3,935.

When it comes to younger producers who may not have a whole lot of their own land beneath their boots, they could be feeling more financial stress that isn’t factored in the reports. Younger crop farmers tend to rent land until they build enough to purchase their own cropland.

“Those operations are showing more financial stress, but for the operation that might own some land free and clear, and they’ve been cautious on maintaining working capital and keeping breakeven costs down, there’s quite a bit of wherewithal to withstand some of the pressure that we’ve seen.”

Cattle producers, on the other hand, show no dip yet in the strong market they’re experiencing. A lower cattle herd, and subsequent lower beef supply, is helping keep beef prices high and lining cattle owners’ pockets. Some have speculated on whether that’s leading some cattle owners to hold back some heifers to build back herd numbers, but Kauffman said he's not seeing indications of that happening yet.

“Part of the reason is because there are costs involved. These costs have to be taken into account for multiple years and not just the current environment. I think there’s some hesitation and some amount of risk aversion, just given the current level of prices, to think about expanding or investing in this market,” Kauffman said.