Increases in both interest rates and average loan sizes have led to significant increases in both interest expenses and first-year loan payments faced by FSA farm loan borrowers over the last twenty years. Between 2005 and 2025, guaranteed operating loans faced the largest increase in total first-year interest expenses, increasing 97% on average. This contributed to an increase in average first-year loan payment levels for guaranteed operating loans of 91%.

The One Big Beautiful Bill Act dramatically increased the premium support on Supplemental Coverage Option (SCO) crop insurance policies from 65% to 80%. The Risk Management Agency of the USDA then announced in August of 2025 that premium support would also be increased to 80% for the Enhanced Coverage Option (ECO) and other similar programs. As a result, farmer-paid premiums for SCO and ECO will be reduced in 2026.

The USDA’s cattle inventory report places the total number of cattle and calves on January 1 at 86.7 million head, as the industry continues into a 7th consecutive year of contraction within the cattle cycle. The report indicates smaller beef cow and beef replacement heifer inventories and a smaller calf crop than anticipated. The report again confirms anticipated year over year drops across most inventory categories with fewer beef cows than any time since 1960 and the lowest total inventory since 1951.

Over the past seven years, the interest expense faced by producers receiving a new USDA Farm Service Agency (FSA) farm loan has increased 50 to 62 percent and the total first-year payment has increased 72 to 89 percent. This is due to both increases in interest rates and loan amounts. Increases in the average size of farm loans received by farmers points to an underlying need for larger levels of financing. This is likely driven by the increase in the costs of variable and fixed inputs.

Policy should not pick winners and losers. That well-worn phrase in DC circles is proclaimed more often than followed. As explored in this article, the most recent projections for crop costs, revenues and payments highlight the potential that extraordinarily large payments on southern base acres of peanuts, rice, and seed cotton will make the difference between profit and loss for those farmers who can plant those base acres to corn and soybeans.

Many farmers will be considering the Supplemental and Enhanced Coverage Options (SCO and ECO) this year, as subsidy levels for these federal crop insurance products have been increased from 65% to 80% In many counties, the Risk Management Agency (RMA) increased the expected 2026 yields significantly above 2025 levels. Still, we find many of the expected yields for Illinois counties are below what one should expect given the crop’s recent historical experience, particularly for soybeans.