As 2026 got underway, interest rates for American farmers continued to retreat to levels last noticed in 2022, as reported in the major agricultural regions including Chicago, Dallas, Kansas City and Minneapolis Federal Reserve districts. But as was the case in the fourth quarter of 2025, just as rates dipped in favor of farmers, the overall credit conditions were bleak during the first quarter of 2026, particularly as tension rose in the Middle East despite government payments, cattle revenues and farmland values providing some support.
Of course, the agriculture conditions varied by region as well as commodity.
For those dairy producers in the Upper Midwest, a Wisconsin lender noted record dairy exports and the allowance of E15 ethanol blends year-round make prospects better for 2026. In the same survey, another lender from North Dakota stated, “Small grain-only operators have been stressed, and the price of fertilizer and fuel will stress them even more.”
In all regions, there seems to be demand for non-real estate farm loans, particularly operating loans. This indicates that there is still demand for farmers to fund their operations in the coming months. Yet, in the Chicago Federal Reserve District, dairy loans were anticipated to have lower volumes.
Interest rates for the first quarter of 2026 ranged from as low as 6.74% in the Chicago Federal Reserve District for variable-rate real estate loans to as high as 7.89% for variable-rate operating loans in the Dallas Federal Reserve District.
Reviewing quarterly lender surveys in predominantly agricultural districts, average interest rates included (Table 1):
- Chicago: Interest rates on variable-rate operating and intermediate loans fell from the fourth quarter of 2025 to the first quarter of 2026. Variable-rate real estate loans did rise from 6.63% in the last quarter.
- Dallas: The average interest rates on both fixed- and variable-rate loans in most categories dropped in the first quarter. Variable-rate real estate loans did increase from 7.38% to 7.42%.
- Kansas City: Interest rates on fixed- and variable-rate loans in all categories were lower in the first quarter of 2026. The lowest interest rate was in the variable-rate real estate loan category at 6.81%.
- Minneapolis: Rate in all loan categories remained relatively unchanged compared to the previous quarter. Variable-rate machinery loans rose 0.1%, and fixed-rate real estate loans fell 0.1%.
Feds keep interest rates the same
At the June meeting of the Federal Reserve Board’s Federal Open Market Committee (FOMC) and reported in the meeting’s minutes, the board voted to keep interest rates at 3.5%-3.75%. The decision was a reflection of economic activity expanding at a consistent pace despite uncertainty from the war in Iran. The meeting noted that both productivity growth and capital investment remain strong.
The next FOMC meeting is set for July 28-29. Remaining 2026 meeting dates include: Sept. 15-16, Oct. 27-28 and Dec. 8-9.
