With farm bankruptcies skyrocketing, Old National Bank offers agribusiness solutions

American farmers in 2026 continue to grapple with a convergence of financial strain, geopolitical shocks, and policy uncertainty that is tightening margins across the agricultural economy.

Farm bankruptcies in 2025 rose more than 45% according to the American Farm Bureau Federation.

“I don’t want to have to file bankruptcy,” said Willis Nelson, 34, a family farmer from Louisiana, speaking to MS Now. “But the way it’s looking, it’s just, it’s tough, you know, very tough on us.”

The Iran war and rising fertilizer, fuel costs

One of the most immediate pressures comes from rising input costs and supply constraints, particularly in fertilizer.

The Iran conflict has disrupted energy and fertilizer markets by constraining shipments through the Strait of Hormuz, a critical trade route. As a result, fuel and fertilizer costs have surged. Farmers around the world are running short of fertilizer because of the war in Iran, according to the Associated Press, raising concerns about creeping lower crop yields and higher food prices.

Fertilizer prices in some cases have jumped more than 30% following the conflict, according to Purdue University, and many farmers are forced to cut back on inputs or adjust crop plans, potentially reducing yields later in the year. The energy shock has also driven up diesel fuel prices, further increasing the cost of planting and harvesting.

Farm finance strains

Cost pressures are compounded by weakening farm finances. A Federal Reserve¹ report from earlier this month found widespread strain in the Midwest, including falling land demand, tighter credit, and declining profitability.

Cash rents, a key indicator of expected farm income, dropped 3% for the second consecutive year, signaling even tighter margins ahead. At the same time, farmers are increasingly reliant on loans, with borrowing demand rising for 10 straight quarters.

Policy uncertainty adds another layer of difficulty. While the House approved year-round sales of E15 gasoline as a standalone measure, broader farm bill negotiations remain unresolved after setbacks, leaving producers without a clear long-term policy framework.

Farmers are being forced to adapt by:

1. Cutting Back on Inputs and Changing Crop Plans — Farmers are reassessing how much fertilizer they can afford to use, with lower yields and crop failures a risk.

2. Relying More on Credit and Financial Restructuring — As margins tighten, more farmers are turning to loans to fund operations. Demand for agricultural credit has increased for 10 consecutive quarters, reflecting financial vulnerability.

3. Adjusting Land and Leasing Decisions — Cash rents are down about 3% in parts of the Midwest, with farmers renegotiating leases, letting go of marginal or high-cost acreage, and avoiding expansion.

4. Adapting to Energy and Fuel Costs — High fuel costs are forcing some farmers to reduce field passes to save fuel, and scrutinize operation timing (planting, harvesting, transportation of crops) to minimize energy use.

How Old National can help

While some relief may come from expanded domestic production or short-term price adjustments, the broader outlook remains uncertain as geopolitical tensions and economic headwinds continue to shape the agricultural landscape. Many strategies involve difficult tradeoffs that could affect productivity and long-term sustainability.

For more than 75 years, Old National has provided the knowledge, experience, and financial solutions to help those in agribusiness cultivate their operations to their fullest potential. For momentum-building solutions for your agricultural business, visit Old National’s Agribusiness Lending page at oldnational.com/business/commercial-banking/specialized-industries/agribusiness-banking.

 

¹ Federal Reserve Bank of Chicago, AgLetter, May 2026