With ag loan interest rates going up, how can lenders keep farmers’ plans on track?

Farmers are astute businesspeople, quick to adapt to shifts in economic conditions.

With more than a year of rising interest rates under their belts, agricultural lenders and analysts are observing changes in the behavior of agricultural producers. To safeguard their working capital in the face of elevated ag loan interest rates, producers are deploying one of three strategies: adjusting their operations, using cash reserves or pumping the brakes on new financing. As these elevated interest rates persist, their impacts will endure.

Despite these headwinds, lenders have an opportunity to offer a fourth option: loans and leases with terms and monthly payments that inspire farmers to give financing a second look.

Effects of elevated agriculture loan interest rates

Farm loan interest rates have surged, approaching the 10% mark, a significant leap from the 4.5% average at the beginning of 2022. Coupled with soaring input costs spanning feed to fertilizer, current ag loan interest rates have driven up financing expenses. A USDA report underscores that interest has emerged as the fastest-growing expense in farm production, with increases of 33.2% in 2022 and 19.1% in 2023.1 These elevated costs prompted the Federal Reserve Bank of Minneapolis to advises all producers, even highly profitable ones with a financial cushion, to factor higher interest into their cash-flow projections.2

The challenge of rising rates for refinancing

For nearly two decades, refinancing has been a favored vehicle for farmers seeking capital for improvements and expansion. However, as interest rates for ag loans rise, farmers may be hesitant to relinquish the lower rates they locked in three years ago.

Elevated interest rates can have an especially strong impact on transitioning farmers. As new farmers step into their roles, they’re fueled by a drive to preserve the family legacy. Their vision for growth may include new commodities, facility updates or cutting-edge equipment like precision ag technology. Yet, their shorter credit history, coupled with higher interest rates, presents a challenge in securing capital with manageable payments.

Despite ample liquidity among ag lenders, farmers are currently pulling back on financing. According to an August 2023 report from the Federal Reserve Bank of Kansas City, “Loan demand has remained subdued for many farm lenders as higher interest rates and an abundance of liquidity on farm balance sheets have reduced credit needs, but many also continued to expect a rebound in the months ahead.”3

Solutions for navigating rising costs of ag interest rates

When higher costs prompt farmers to rethink their expansion plans, lenders can explore valuable resources to help keep those plans on track. A partnership with Agri-Access offers new avenues for helping farmers grow amid changing lending conditions.

Syndicate lending: Unlocking growth opportunities

Investigate the syndicate lending options from Agri-Access. Collaboration can transform a producer’s business vision from “impossible” to “possible.” Through this partnership, lenders can offer extended terms with reduced risk factors, enabling producers to consider expansion as a financially viable option.

Leasing for cost-efficient growth

When the high cost of refinancing becomes a barrier to growth, ag leasing solutions from Agri-Access provide an appealing alternative. With a unique end-of-lease buyout option built into the agreement, farmers gain control over the asset, while enjoying benefits that a total refinance can’t provide: no down payment requirements, lower costs of using debt capital and increased working capital.

Expand your lending power with Agri-Access

In an era of rising agricultural loan interest rates, the landscape is shifting for farmers and lenders alike. To manage these shifts, farmers are seeking cost-effective ways to preserve and grow their operations, while lenders have an opportunity to provide innovative financing solutions that bridge the gap. At Agri-Access, we’re committed to empowering both farmers and lenders with options that make growth and financial stability achievable. Our specialty is ag financing, so you get the depth and expertise you seek.

Learn about our participation loan offerings, and reach out to a relationship manager any time to get started.


  1. USDA Economic Research Service | Increases in U.S. Farm Debt and Interest Expenses Minimally Affect Sector’s Financial Position in the Short-Term, as Measured by Liquidity and Solvency Ratios
  2. Federal Reserve Bank of Minneapolis | Elevated interest rates: How they impact producers’ cash flow and profitability
  3. Federal Reserve Bank of Kansas City | Farmland Values Stay Resilient as Farm Economy Moderates

Let’s discuss how we can expand your ag lending power.