The Farm Crisis Is a Lender Crisis. The Annual Review Will Be Too Late.

By Joe Jennings, Founder & CEO, Tilley Ag

Half of your farm borrowers may not be profitable this year. 

Not half the industry. Not half of struggling operations. Half of the borrowers sitting in your loan portfolio right now—according to lenders themselves. 

Three years ago, that number was 80 percent. 

That’s not a gradual decline; it’s a structural shift happening faster than most balance sheets can absorb. And here’s the part that should give every ag lender pause: 93% of lenders already expect farm debt to keep rising this year. Everyone sees it coming. The question nobody is answering clearly enough is what to do about it before it arrives at your loan desk. 

The mechanism is worth understanding.

It’s not just that farm income is down. It’s how the stress is traveling through the system and where it’s accumulating. 

Operating loans are doing work they were never designed to do. What started as a working capital tool is increasingly being used to cover shortfalls, carry forward losses, and bridge the gap between what a farm earns and what it owes. Demand for operating credit rose throughout 2025 and is projected to keep rising into 2026. That’s not farmers borrowing to grow their operation, that’s farmers borrowing to stay in business–simply survive to farm another year. 

The problem with this pattern—and any lender who has managed an ag portfolio through a down cycle knows it intuitively—is that it compresses the timeline between stress and default without making the stress visible, particularly when the relationship is strong and the operating line looks active. Yet, the underlying financial picture is deteriorating in ways that don’t surface until the annual review, at which point the window to intervene has often already closed. 

To add to the stress, seventy percent of ag lenders now identify grain and cotton farms as their top credit concern. That’s up from 15 percent in 2023. The risk didn’t materialize overnight. It accumulated quietly, masked by government payments that propped up net farm income without fixing the structural gap between what it costs to farm and what the market returns for doing it. 

Here’s what I keep coming back to.

Every industry report right now—and there are good ones—tells farmers to maintain rigorous financial records, engage proactively with their lenders, and build resilience through better planning. The advice is correct. It is also, for most row crop producers, almost impossible to act on without the right technology. 

Think about what a farmer is actually managing in 2026. The One Big Beautiful Bill created new areas where expanded overlapping coverage among a farmer's underlying MPCI policy, area-based crop insurance (ECO and SCO), and FSA programs (ARC and PLC) can represent real balance-sheet value. The interaction between these programs — particularly SCO alongside ARC changes a farm's risk profile in ways that most farmers and their advisors aren’t fully capturing. The modeling required goes beyond what most crop insurance agents can do manually, let alone farmers trying to figure it out on their own. So that coverage sits on the books unrecognized: a financial asset that never makes it into the credit conversation. 

Add fixed cash rent obligations that don’t flex when commodity prices fall, equipment loan debt across multiple payment schedules, and grain marketing positions spread across cash sales, futures, options, and basis contracts that are tracked in different places or not tracked at all. No single person in that farmer’s advisory circle—not the crop insurance agent, not the lender, not the grain marketer—ever sees the complete revenue and risk picture at once. 

So when a borrower walks into your office and can’t clearly articulate their repayment capacity, or doesn’t realize their crop insurance coverage represents collateral value that should factor into the discussion, they’re not hiding anything. They just don’t have a system that makes any of it visible. 

That’s the gap. And it belongs to the lender as much as the farmer.

What changes when the picture is clear?

We built Tilley to close that gap—a farm profitability platform that connects a farmer’s budgets, FSA program elections, crop insurance analysis, real-time grain sales and marketing positions, and financial analysis and performance scorecard in one place, updated in real-time with live data integrations when conditions change, and markets move.  

So now with Tilley, the problems that used to surface in a loan review surface immediately—when action can be taken.  

Operating lines masking term debt. ARC/PLC payments for both 2025 and 2026 crop years, missing from cash flow projections. Overlapping coverage unrecognized as a financial asset. Untracked revenue and not having a complete position summary distort the repayment picture. These aren’t edge cases—they show up consistently across operations of every size because the data has never been connected between a farmer and all their trusted advisors before. 

The result: a borrower who walks in prepared and a lender who can finally see the full picture. Repayment capacity becomes a real number. Portfolio risk drops. And the bottom line reflects it. 

We modeled it against a $50M community bank ag portfolio—50 borrowers, 4 expected defaults. With Tilley on 25 at-risk borrowers: 17X return on the investment, 0.85% yield improvement, $425,000 net gain, two defaults avoided. What it shows is not some generalized projections, but real measurable returns when you run the necessary analytics to uncover specific risk within a portfolio. 

The bottom line.

A recent AgAmerica economic outlook report—one of the better pieces of industry analysis I’ve read this year—closes with a line worth sitting with: "Optimism alone is not a strategy."

They’re right. And neither is advice without the technology to act on it. 

The farm financial crisis and the ag lending crisis are the same crisis—they always have been. When a farmer can’t service debt, the lender absorbs the loss. When a lender pulls back at the wrong moment, a farmer can’t plant. These aren’t separate problems with separate solutions. They’re the same problem, and the only way through it is if both sides can finally see the full picture at the same time — and right now, with so much critical farm data disconnected, that's no longer a nice-to-have. It’s a lifeline.

The lenders who will be best positioned at the end of the 2026 crop year are the ones who got ahead of their at-risk borrowers early in the season, not the ones who waited for the annual review to find out what they were dealing with. 

If you’re managing an ag portfolio and want to see what this looks like in practice, I’d welcome the conversation. 

Joe Jennings is the CEO and founder of Tilley, a farm profitability platform connecting farmers, crop insurance agents, lenders, and grain marketers around a single source of financial truth. Learn more at tilleyag.com/lenders.

SOURCES

U.S. Department of Agriculture, Economic Research Service. (2026, February 5). Farm sector income & finances: Farm sector income forecast. 

Farmer Mac. (2025). 2025 Ag Lender Survey. 

AgAmerica. (2026). The 2026 U.S. Agricultural Economy Outlook: The Impact of Interest Rates, Income, and Farm Policy on the Future of American Agriculture.