Commercial bank farm lending moderated in the second quarter of 2026, with new non-real estate farm loan originations declining across most categories, according to the Federal Reserve Bank of Kansas City's latest National Survey of Terms of Lending to Farmers.

Loan volumes fell alongside smaller average loan sizes at banks with larger agricultural portfolios, while interest rates remained largely unchanged from the prior quarter. Average rates on loans exceeding $100,000 held just below 7%, although borrowing costs continue to run above long-term historical averages.

One notable bright spot for equipment finance was farm machinery and equipment lending. Unlike most other lending categories, machinery and equipment loan volumes increased more than 50% compared with recent-year averages, highlighting continued producer investment in equipment despite tighter overall agricultural credit conditions.

The report noted that easing fertilizer and energy costs helped reduce operating expenses for some producers, but lower commodity prices continued to pressure crop farm margins. Strong cattle prices and farmland values near record levels continued to provide support for portions of the agricultural economy.