It's still a tale of two agricultural economies.
This spring, the Federal Reserve Bank of Kansas City has published several reports on the U.S. agricultural economy, looking at the first part of the year. In its most recent report, economists write that U.S. agriculture is facing challenges but as a whole, it's relatively stable.
In the first quarter, farmers growing crops had slim chances of turning a profit, but ranchers saw continued high beef prices and farm real estate remained solid. The Federal Reserve's April Agricultural Finance Update shows producers took out more loans to start 2026.
There's uncertainty paired with erratic commodity, energy and fertilizer markets. Despite the hurdles, economists say the value of farmland remains strong, and government payments have provided some support.
"I don't think that overall, the agricultural economy is in necessarily a historic situation," Reserve economist Cortney Cowley said. "I think there's still, when you consider that 80% of farm balance sheets are still made up of farm real estate, and farm real estate values are still very solid."
In Oklahoma, there are producers who raise only crops or only rear cattle, but many have diversified operations, growing both crops and livestock.
Because of the cattle industry, the state has been more stable compared to other crop-heavy states in the region. At the same time, Cowley said there is weakness and concern, even in Oklahoma, on the crop side, especially for producers who raise crops exclusively.
Increase of livestock loans
Large operating and livestock loans drove the increase in leading, according to the finance update.
"Why this is important for Oklahoma is because 50% of our farm revenues come from cattle production, primarily beef cattle production," Cowley said. "So we're seeing, those feeder livestock lending increase alongside larger loan sizes that have also grown with higher cattle prices."
Those steep cattle prices result in pricier ground beef, chuck roasts and ribeye steaks at the grocery store. The cost of beef has been at an all-time high, and the cost keeps climbing, reaching about $6.90 per pound on average for ground beef last month.
Prices are high because droughts have shrunk the national cattle herd and consumer demand remains high. Although ranchers are seeing gains, other players in the beef supply chain are facing lows and taking out loans to afford cattle.
But there was not much lending activity for breeding livestock. Cowley said this tells her many ranchers are not holding back cows to raise more calves. For consumers, this means the historically low inventory and high prices could continue for longer.
But that doesn't mean producers who rear cattle are out of the woods, Cowley said. They are still facing high input costs and uncertainty.
"Then they're also facing, you know, seeing the operating lines also increase because we're seeing input costs kind of across the supply chain for all inputs increase, particularly following the closure of the Strait of Hormuz and the conflict in Iran," Cowley said.
Uncertainty in crops
Economists write for the past three years, the opportunities for crop producers to make a profit have been few and far between.
Pairing that with higher production costs, low prices, and recent erratic energy and fertilizer markets results in uncertainty, according to the reserve's Economic Bulletin from last week.
The U.S. War in Iran caused prices to soar for the fuel needed to run machinery and for fertilizer for crops.
However, farm-level estimates of their ability to pay debts and liquidity hint that most "farms remain in a sound financial position," according to the Federal Reserve.
The data show a moderate decline in liquidity, but reserve economists note it may be partly due to the strength of the beef cattle sector, as well as crop and dairy farms with diversified operations, including raising beef cattle.
Government payments and steady off-farm income provided support, too.
Farmland values also helped in limiting financial stress. But if conditions in the crop sector continue, it could put more pressure on producers.
"Government payments, non-farm income, and strong cattle revenues in many regions have supported incomes and liquidity, while farm real estate values continue to support solvency," according to the reserve. "However, prolonged weakness in crop profitability could weigh further on farm finances, making the stability of farmland values critical for the sector."
Steadier farm incomes
In the reverse's latest Agricultural Credit Survey from last week, borrowing power showed signs of gradual declines with repayment rates, debt carried over and loan restructuring similar to one year ago.
They write concerns about fertilizer and fuel costs staying through early May. Although input costs might increase, an improvement in crop prices has loosened some pressure on margins.
In Oklahoma, respondents reported improved farm incomes but lenders also reported loan demand increased sharply in the state.
This report was produced by the Oklahoma Public Media Exchange, a collaboration of public media organizations. Help support collaborative journalism by donating at the link at the top of this webpage.
