AgriAcess Insights 2026 - Flipbook - Page 2
AG BANKING
INSIGHTS
K EY ME TR ICS
$404.3
BILLION
Projected farm real estate debt
in 2026.
Source: Department of Agricult ure
Breakdown of U.S. Family Farms,
2022
1,614,764
small family farms
110,510
midsize family farms
75,089
How can banks build success in lending to the 1.8 million family farms across
the U.S.? As those operations consolidate, lenders will need to build balance
sheet strength and an offering that serves clients’ various needs.
large and very large
family farms
Source: Department of Agricult ure
Successfully banking the nation’s roughly 1.8 million family farms — primar-
KEY TAKEAWAYS
ily small operations — requires knowledge, experience and “long-term patience,”
says Rob Keil, chief credit officer at $4.9 billion Dacotah Banks in Aberdeen,
• A successful ag banking vertical
requires an experienced team and
balance sheet capacity.
• A reduction in working capital is
driving demand for ag loans.
• The secondary market and loan
participations can help free up
capital to serve larger clients. Ag
banks can also leverage state and
federal grant programs.
• Land comprises a huge portion of a
farm’s balance sheet, and the value
of that land has climbed since 2021.
• Around 70% of U.S. farmland will
change hands over the next 20
years.
South Dakota. That’s because producers, from cattle ranches to corn and soybean farmers, face good and bad years. And the bank needs to be prepared to
withstand cycles with their ag customers. “Sometimes bankers end up being
a consultant more than a banker,” he says. That experience can prove vital in
understanding which operations are strong enough to weather the sector’s
challenges, such as the dip in commodity pricing experienced by row crop farmers over the past few years.
A great team, along with a diversified loan portfolio, is critical to a successful
ag banking vertical. But equally important is having access to the liquidity and
capital needed to serve a consolidating agriculture sector. Farms and ranches are
getting larger due to decades of consolidation, and those operations face growing financial needs. The nation’s 945 ag-focused banks — all of them under $10
billion in assets and primarily serving rural markets — will need to leverage
partners and programs to serve those clients.
“Ag banks want to finance everybody that they can in their community,” says
Trever Hall, a vice president and relationship manager at Agri-Access, which
provides ag lending capital solutions that help banks manage concentrations,
support larger clients and provide faster credit decisions. “Sometimes, they just
don’t have the horsepower behind them to do that.”
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