By P.J. Huffstutter
CHICAGO, Oct 8 (Reuters) - American farmers are borrowing more money than ever before to operate — but the rise in non-traditional and vendor credit has created some gaps in the federal government's current ability to measure and track farm debt, US Department of Agriculture officials told Reuters.
Financial pressure is mounting across farm country, where growers have already faced years of tight margins due to slumping prices and high input costs. More recently, farmers have struggled
with disruptions to export markets from Washington's trade fights with top buyers including China, while the US-Israeli war with Iran has driven up the cost of fertilizer and fuel.
As farm bankruptcy filings have climbed, some banks have tightened credit, prompting growers to seek money elsewhere. Inflation-adjusted US farm debt has more than doubled since 2000, rising from about $300 billion to more than $605 billion this year, a record, according to the latest USDA estimates.
But that figure may understate how much farmers owe, Reuters found. Farmers are increasingly borrowing from suppliers, farmer cooperatives, equipment manufacturers, financial technology firms and other nontraditional lenders that are more difficult for the government to comprehensively measure.
The USDA is launching research projects to better track that debt, and to understand whether financial stress in agriculture could be affecting the broader economy, officials said.
“There are new lenders popping up and we need to find ways to access that data,” Jeffrey Hopkins, acting assistant administrator at USDA's Economic Research Service, told Reuters.
Jenny Ifft, a Kansas State University agricultural finance professor currently working on a research project with USDA studying non-traditional farm lenders, estimates there could be two to three times as much debt as what USDA reports in its "individual and others" category, which the agency pegged at $45 billion in 2025.
Such suppliers of vendor credit include Minnesota-based dairy company Land O’Lakes, one of the largest US agricultural cooperatives, which offers credit lines for farmers. Its financing arm has grown from roughly $100 million last fall in committed loans, or lines of credit typically issued to help producers cover operating costs, to more than $1 billion for crop year 2027, Chief Executive Beth Ford said on Tuesday at the Economic Club of New York.
To gather vendor credit data, USDA is cross-checking farmer surveys against USDA Farm Service Agency loan records and funding research examining the size of the non-traditional lending market, among other efforts, Hopkins said. The agency hopes for results within two years.
'SPILLOVER EFFECTS'
This past season, roughly half of all US commercial farms relied on vendor or non-traditional lenders to cover their operational expenses, up about 10% from a year earlier, said Wesley Davis, a partner at Meridian Agribusiness Advisors, an agricultural economics firm.
As a result, the USDA is looking at “whether there are potential areas that could have spillover effects to the rest of the economy,” Hopkins said. He pointed to past periods, such as the subprime mortgage crisis of 2007-2010, which rippled through the broader economy, and limited data made it difficult to distinguish healthy from troubled debt.
Historically, USDA measures farm debt from data that banks, Farm Credit institutions and other lenders report to regulators. To measure vendor credit, it typically uses its Agricultural Resource Management Survey, a roughly 24-page producer questionnaire, where response rates have fallen from about 68% in 2009 to nearly 33% in 2025, according to USDA data.
Of the more than 52 commercial-sized row-crop farmers Reuters interviewed across seven Midwestern and Southern states, the majority maintained between 7 and 10 separate lines of credit. Some had more than 30. One family in Iowa said it had 42, largely because equipment dealers often required separate credit lines each time they bought or leased a new piece of machinery.
Previous research has found evidence that the USDA can significantly undercount equipment debt.
A 2024 peer-reviewed study from Kansas State University, USDA's Economic Research Service and the National Credit Union Administration analyzed more than 4.4 million equipment liens across 14 farm states from 2001 through 2019. They found that equipment debt issued by non-traditional lenders was as much as four times larger than USDA data showed.
"How can lenders, policymakers, regulators and key stakeholders accurately assess debt volumes and farm financial stress when neither is reported for many lenders that serve the most stressed borrowers?" said Ifft, one of the authors.
Some vendor financing is captured in federal data USDA already analyzes, Hopkins said. Some loans that appear to farmers to be vendor-financed are actually credit issued by the Farm Credit System or commercial banks that report such debts to regulators, he said.
Suppliers and retailers that offer credit help customers to buy their products, Davis said. But those businesses also could be taking on additional risk themselves, particularly if the credit they offer has no assets securing such debts.
"The risk we could see then is not just to the farmers themselves, but financial distress to the broader agribusiness ecosystem," he said.
(Reporting by P.J. Huffstutter. Editing by Emily Schmall and David Gaffen)
