Bankers: Arkansas Farmers Walking A Tightrope That Gets Thinner Each Season

On a typical summer’s day in Arkansas’ rural reaches — or that of any other state, actually — the landscape is the same. From the corn belt of the upper Midwest to the squat peanut stands of Georgia to the billowing rice fields of Arkansas’ Grand Prairie, an unending sea of green is all that meets the eye.

But of everything green that a typical farm deals in year in and year out, money has proven the toughest to take root. Higher input costs, sluggish markets and a string of international issues have all put farmers under increasing strain. Farm Aid reported that farmers were expected to break even in 2025, but the inexorable tightening of economic conditions over time is starting to strangle many of the nation’s providers.

In Arkansas, 37,200 farms cover 13.6 million acres, or 41 percent of Arkansas ground, according to 2025 statistics published by the University of Arkansas System Division of Agriculture. Despite its relatively small size, Arkansas punches well above its weight in productivity. In 2024, Arkansas ranked in the top 10 among states in nine categories including rice (first), broilers, catfish, cotton and cottonseed (third), turkeys (fourth), peanuts (seventh), chicken eggs (ninth) and soybeans (10th). The state also ranked in the top half of states in corn for grain, cattle and calves, and hay production, the U.S. Department of Agriculture states.

All of that adds up to make agriculture a major economic force in the state, more so on a percentage basis than peer states throughout the southeastern region of the country. As reported by USDA, the aggregate agriculture sector’s share of Arkansas’ gross domestic product is nearly four times that of Texas, twice that of the southeast region, which also includes Louisiana, Oklahoma, Tennessee, Missouri and Mississippi, and nearly three times that of the nation as a whole.

The industry generates 14.4 percent of the state value added, approximately $25.2 billion worth, a measurement that includes labor income plus indirect taxes and other property-type income generated by agricultural production, processing and ag-related activities. The USDA ranked the Natural State’s $13.8 billion in total cash receipts 14th in the nation in 2023, including 10th in animal and animal products at $8 billion and 16th in crops at $5.8 billion.

The problems on the farm are at once plain-English simple — higher costs plus lower commodity prices — and maddeningly nuanced in the push-me, pull-you way prices affect different ag products and therefore different sectors of the industry.

“Agriculture in Arkansas is pretty diverse, and it depends on which segment you’re in,” said Greg Cole, president and CEO of AgHeritage Farm Credit Services in Little Rock. “If you look at western Arkansas, you’ve got mostly cattle and poultry. Cattle prices are at an all-time high right now. They’re doing really good. The poultry companies are making money, and the poultry house business is pretty good.

“The eastern part of the state is mostly row crops. These are big commercial producers that produce rice, cotton, soybeans and corn predominantly. That’s the area that’s the most stressed. In fact, I just got back from a national meeting, and the two hottest spots in the whole United States where agriculture was the most stressed were in California, in the nut and wine sector, and here in the mid-South, defined as the bootheel of Missouri all the way down the eastern part of Arkansas, western part of Mississippi and eastern part of Louisiana. Farmers there are losing money, and the outlook is not very good.”

Cole, who is approaching 42 years in banking, about half of them at AgHeritage, said the only thing that compares to the current situation is the farm crisis of the 1980s. Decades before there was a tech bubble or a housing bubble, a more existential crisis played out across America’s heartland, one that brought the nation’s producers to their knees.

After a boom period in the 1970s where grain contracts with the Soviet Union boosted crop and protein prices skyward, producers started gobbling up available land to take advantage of the situation.

“We had much higher corn and soybean prices that led to good returns in agriculture, but mainly what it did, as well, is led farmers to buy a lot of farmland and use debt to buy that farmland,” Gary Schnitkey, University of Illinois Extension farm management specialist, said in a 2022 AgriNews retrospective of the crisis.

“Farmland prices were going up and going up, and we got some pretty high debt-to-asset ratios on these farms because we’d buy farmland, which we always believed was going to keep going up. We had to have it right now, so we bought it and bought it and got some pretty high debt levels. That set this [farm ground bubble] up.”

As history now shows, runaway inflation heading into the 1980s caused Washington to take action in the form of the Federal Reserve raising interest rates. The farmland bubble burst almost overnight as land values bottomed out, and that, combined with the Soviets’ grain embargo in 1979 and subsequent lower exports between 1981 and 1983, drove U.S. farm debt to $215 billion in 1984, double that of just six years prior. The impact was severe; producers quit in wholesale numbers, some foreclosed on and some just beaten into submission to the tune of reducing the number of family farms by about two-thirds compared to the 1930s.

Cole said while similar, the circumstances of 1981 are not identical to those of 2026, allowing many producers more breathing room, starting with land values.

“In the 1980s, farmers were in what I call the negative trifecta. They were eroding the balance sheet through operating losses and equipment depreciation and substantial land depreciation. Back then, we had land base fall as much as 60 percent. Today, our land values are still positive to steady,” he said. “Also, interest rates — even though our interest rates have come up from historical lows, from an historical perspective, they’ve steered more as average. Back then, interest rates were really elevated, with the prime interest rates peaking in 1980 at 21.5 percent.

“There were other factors too. Farmers then didn’t have risk management tools here in eastern Arkansas. A lot of the land wasn’t irrigated, where today the majority of it is irrigated, which reduces production risk. We have crop insurance today, where we didn’t back then, so what I’m seeing now is a pretty severe cycle that’s not as bad as the ‘80s, but it’s the toughest I’ve seen since the ‘80s.”

The ripple effect of the current crisis affects everyone and not just in the ways most people think of, through shortages and sticker shock at the grocery store. A struggling ag economy reverberates throughout all sectors of society, affecting ag-related and ag-supporting businesses such as processors, implement dealers and Main Street businesses of all descriptions found throughout the small towns dotting the nation’s rural areas, banking included.

Todd Wilson, loan manager at Signature Bank in Brinkley, works in the heart of Arkansas farm country. He said he sees this trickle-down effect in play every day in the community.

Todd Wilson

“In our part of the world, it’s not only affecting the farmers, but everybody in our community is affected by this downward turn,” he said. “The ag pilots, they’re losing money. The truckers are losing money. The beauticians are losing money. Agricultural affects our community 100 percent.

“Riceland Foods made a comment to a meeting a couple weeks ago that they weren’t sure if they were going to be able to keep all their facilities open because of the decline in the rice market, so that would create more people without a job if they close those facilities. Like I said, it’s not just farmers. Agriculture affects everything that we do in eastern Arkansas.”

Wilson said of all the dour news of late, it is hard to pick out the most concerning trend, but the state of rice production comes mighty close.

“Rice has been the main staple in our part of the world, and in this day and age right now, rice is probably the worst crop that you could farm,” he said. “The USDA Farm Service Agency gives us a breakdown every spring of what they project the income is from each and every crop grown. That includes cattle, apples, nuts, fruits, vegetables — everything. Since 2023 to 2026, rice has gone down $2.56 in their projection. For a farmer that is cutting 180 bushels of rice, that’s a $460.80 loss per acre.

“Meanwhile, the input costs for the farmer have gone up. It’s $900 an acre to plant hybrid rice now, and that’s just the seed. Fertilizer has gone up since the beginning of this year, $165 a ton. Diesel fuel has gone up $1.20 in the last 45 days. For a farmer that’s producing rice and they’re having to water that crop and they’re putting fertilizer on it, it is eating into the bottom line every single minute.”

Until recently, financial relief for farmers has been slow in coming from Washington. The lack of an updated Farm Bill, last passed under President Donald Trump in 2018 and which expired under President Joe Biden’s watch in 2023, has limited protections and safety nets targeting farmers. Trump worked hand in glove with Sen. John Boozman of Arkansas, who heads the U.S. Senate’s ag committee, resulting in two emergency aid packages thus far: one at the start of the president’s second term and the other in December.

The biggest accomplishment was incorporating about 85 percent of Farm Bill protections into the One Big Beautiful Bill Act passed last summer, and other creative funding measures are apparently underway in Washington. As first reported by Politico, more than 50 farmer groups have pressed the president to include ag relief in a military funding package currently before Congress. The industry groups and their Republican lawmaker allies are seeking $15 billion in relief on the argument that it would mitigate effects on the nation’s agriculture from the military action against Iran.

Meanwhile, the primary source of funding for many producers is a familiar one — borrowing from local sources. Even that can only go so far, said Cole, whose organization is part of a nationwide co-op that lends to its members.

“Farm credit is very strong. We’re well capitalized, and we have a strong ability to fulfill our mission of working with producers in not-so-good times like today,” Cole said. “Now, having said that, as we tell people, we loan money; we don’t grant money. The numbers have still got to work. As a cooperative, if I loan you money and you can’t pay me back and I lose money on you, that comes out of your other members’ equity. It’s not like it comes out of some absentee stockholder.

“So though we’re very stable, farmers still have to have a valuable plan, and they have to have equity to borrow money, and they have to be able to pay it back.”

Therein lies one of the long-term issues likely to stretch for years after the current cycle starts to improve, Wilson said. With prolonged conditions being what they are, many farmers’ equity picture looks a lot different than it did just a few years ago, especially as it applies to those looking to retire after a lifetime in the fields.

“I had a farmer make this comment: He said, ‘I am eating up my retirement by keeping farming because I do not have any equity left in my equipment.’ That’s what he was wanting to retire on, his equity and his equipment, and it’s just going away,” Wilson said.

“Most of our farmers have land and equipment and stuff to fall back on, and now they’re eating up their entire equity. That’s the sad part about it. Farming is the only industry in the world that you start making a product, and you do not know what you’re going to get for it at the end.”

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