FCA board receives quarterly report on conditions in agriculture and the Farm Credit System
McLEAN, Va., Sept. 11, 2025 — At its monthly meeting today, the Farm Credit Administration board received a quarterly report (PDF) on economic conditions affecting agriculture, together with an update on the financial condition and performance of the Farm Credit System (System) as of June 30, 2025.
Quarterly report on conditions in agriculture and the Farm Credit System
Through the first half of 2025, U.S. economic growth was positive but moderating.
Personal consumption growth slowed as consumers began to pull back from recent spending sprees. Fixed investment growth also remained positive but was driven by large, concentrated investments in AI infrastructure. Changes in trade policy have led to fluctuations in net exports and private inventories.
Inflation has remained elevated in 2025, though its composition has changed. Declines in housing inflation have been offset by cost increases in some services. Changes to tariffs did not have a significant impact on inflation through July, though their impact on future inflation is uncertain.
Labor markets appear to be holding but are showing increasing softness with rising unemployment rates and higher long-term unemployed rates. This softness has led markets to expect additional reductions by the Federal Reserve in the federal funds rate through the end of 2025.
Farm income in calendar year 2025 is expected to rise, though with a sharp divergence in incomes between crop and livestock producers. Many crop producers are facing their third year of weak or negative returns due to large global supplies and sticky input costs.
Livestock producers are generally seeing strong returns, with some risk that higher prices are cutting into exports. Labor access and potential shifts in global trade patterns from the current tariff environment are key risks for the entire sector. USDA has projected that direct government payments will increase by $30 billion in 2025 through programs such as the Supplemental Disaster Relief Program.
Growth in agricultural land values is slowing. Crop markets are placing downward pressure on values, while the livestock sector and nonfarm influences (such as urban or commercial uses) are providing support. Nonfarm influences are greatest along the coasts and are present near major urban areas or commercial activity such as energy production. In 2025, areas with limited livestock or nonfarm influence have seen farmland value declines, particularly for lower-quality land.
For the first six months of 2025, the System reported modest loan growth, increased capital levels, and steady earnings. Overall portfolio loan quality remained sound, but nonaccrual loans and allowance provisions continued to trend higher. Nonperforming assets as a percentage of loans outstanding, and other property owned, increased to 1.02% as of June 30, up from 0.64% a year ago.
While producers in certain agricultural sectors continue to face difficult operating conditions, the System’s strong balance sheet provides the means to support the funding and liquidity needs of U.S. farmers and ranchers.
Notational votes
Since the Aug. 14 FCA board meeting, two notational votes have occurred. Notational votes are actions the FCA board takes between board meetings.
On Aug. 26, the board authorized the Office of the Chief Financial Officer to reallocate funds for the FY 2025 budget to cover agencywide expenses in accordance with the board’s priorities.
On Aug. 27, the board voted to approve the agency’s FY 2026 revised budget, the FY 2027 proposed budget, and the reallocation of funds within the FY 2026 budget.