Farmers, Lenders Confront a Hard Year (Kirk Vansandt Commentary)

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After two decades in agricultural finance, I have seen tough cycles, but 2025 is notable for the number of challenges Arkansas farmers face simultaneously and from all sides. For farmers, it means difficult conversations about how to get out or stick it out; for lenders, it means emptying the toolbox to build the best strategy for either outcome or the myriad choices in between.

At stake is the future of American agriculture, in which Arkansas plays a key role. The U.S. needs strong, sustainable producers and new farmers to replace those aging out or exiting early. How farmers and lenders navigate this historic pressure will reverberate throughout the industry for decades.

So what challenges are farmers facing? This year, every trip I’ve taken to Arkansas farms has yielded variations of the same story. In short, it’s:

Weather woes: Rainy weather and spring flooding have kept tens of thousands of Delta acres out of production.

Expensive money: U.S. interest rates remain high. Agricultural loan interest rates have soared past 8% in the Federal Reserve’s 8th District, which includes Arkansas, making credit more difficult for farmers.

Politics, at home and abroad: Tariffs and military conflicts in markets that consume U.S. agricultural products can dramatically affect markets. The One Big Beautiful Bill Act did help set better reference prices, particularly with rice, but for farmers to break even in 2025 it will take even more help from additional subsidy payments.

Markets in reverse: Commodity prices are back at 2018-2019 levels, according to a July report by the University of Arkansas System Division of Agriculture. But the inputs required to raise those crops — seed, fertilizer, chemicals and diesel — erode much of the annual budgets and equipment purchases, repairs and insurance costs are at all time highs.

Rising Bankruptcies, Exits

All this means immense stress on farmers. Beginning late last year and accelerating this summer, farmers of all sizes began asking, “Do I still want to farm next year?” The calculation is different for everyone, but the end result is increasingly common: The UA report showed 259 Chapter 12 farm reorganizations filed between April 2024 and March 2025, with first-quarter filings up to 88 this year from 45 last year. More than 60 farm auctions have been held in Arkansas since December.

How to help? Ag lenders do their best, seeking realistic solutions to reach the best outcome for everyone. And because every farm is unique, the solutions must be, too.

That includes everything from rerouting cash or a minor restructuring to a strategic asset sale or, if absolutely necessary, an orderly exit. The goal? Help the producer achieve a resolution with dignity and capital intact.

Market volatility and policy uncertainty aren’t going away. But through disciplined planning, collaboration and honest conversations, I believe Arkansas producers and their lending partners can manage the fallout, and perhaps emerge even stronger as the farming community has proven to be resilient.

The choices we make in this chaotic season won’t just decide who plants next year; they’ll determine which hands feed America. That future, row by row, remains ours to cultivate — together.

Kirk Vansandt is the president of the Agriculture Division of Farmers & Merchants Bank/The Bank of Fayetteville and market president for DeWitt.