Do Different Types of Farms Pay Different Interest Rates?

Agricultural operations are facing unique financing challenges due to elevated input and farmland prices combined with a multidecade high in interest rates. Elevated production expenses increase the need for borrowing, and high interest rates impact farms through increased borrowing costs. Traditionally, a large share of non-real estate debt held on farm balance sheets has been current1 debt, which is sensitive to shifts in interest rates. However, longer-term debt can be vulnerable as well. The Kansas City Federal Reserve reports half of all farmland real estate loans will need to be refinanced in the next 18 months (Kreitman 2024). In this final article of our series, we examine how the interest rates charged by various lenders differ by farm commodity specialization and farm business typology.