Federal Agricultural Mortgage (AGM) investor relations material

Key updates from USDA farm income release

• Net cash farm income for 2025 was revised down to $180.7B, a 5-7% drop from February's forecast, marking a rare downward revision for this period.

• The decrease is driven by lower crop receipts, a $3B reduction in direct government payments, and higher cash expenses, especially in feed and interest costs.

• Animal product revenues increased, with beef and dairy sectors showing strong performance, partially offsetting crop sector weakness.

• Farm sector debt is projected to rise by $30B in 2025, with both real estate and non-real estate debt contributing, reflecting increased borrowing and working capital recapitalization.

• Farmland values show regional variation, with some plateauing nationally and pockets of stress, especially on the West Coast, while pasture land values continue to rise and overall price growth is slowing.

Sector trends and market insights

• Livestock, especially beef, is a bright spot, with high retail prices and increased value for dairy bull calves, significantly boosting dairy revenues.

• Imports of beef have surged, helping to moderate retail prices but not significantly depressing them.

• Grain markets are mixed: corn ending stocks are tightening, supporting prices, while soybeans face oversupply and weak export demand, especially from China.

• Working capital on farms is up, but much of it is tied up in inventories rather than cash, reflecting delayed crop marketing and higher animal values.

• Lenders are advised to prepare for increased farm debt and to focus on expense management, as family living costs remain sticky and government payments are uncertain.

Outlook and recommendations

• Despite the downward revision, net cash farm income remains historically strong, and many producers are expected to perform well in 2025.

• The ag sector is entering a tighter cycle with more debt, higher expenses, and less government support, requiring proactive management by both producers and lenders.

• Farmland values and sector equity remain generally stable, but regional disparities and increased leverage warrant close monitoring.

• Continued volatility in commodity prices, policy, and global trade will shape the sector's performance, with opportunities for recovery if trade relations improve.

• Engagement with updated USDA data and sector analysis is encouraged for informed decision-making.