By Mary Hightower
University of Arkansas Division of Agriculture 

Fast Facts 

  • Communication key to prevent ‘distressed’ designation
  • Farm Credit borrowers have rights in distressed loan situations 

FAYETTEVILLE, Ark. — Farming is expensive.

A professional headshot of a smiling woman with shoulder-length blonde wavy hair. She wears a black blazer over a textured white V-neck top against a plain light gray background, looking directly at the camera with a warm expression.

NALC’s Mary Eichenberger explains what a distressed loan designation means. (UADA image).

For example, a new combine alone can run between $400,000 to $1 million. Farmers can use 2-4 gallons per acre of diesel just for tillage, plus whatever is needed to run irrigation pumps during growing season. Then there’s the cost of seed for use over hundreds or thousands of acres, plus fertilizers and controls for crop-hungry insects and diseases.

Coupled with low commodity prices, the financial challenges have been severe, especially in Arkansas, which led the nation in farm bankruptcies in 2025 and led the nation again in the third quarter of 2026, according to an analysis by the National Agricultural Law Center. 

Attorneys with the center said that Farm Credit borrowers whose loans are determined to be “distressed” are entitled to certain protections under Farm Credit Act of 1971. 

“Agricultural production requires large amounts of capital, leading many producers to borrow money and incur large debts,” said Mary Eichenberger, staff attorney for the National Agricultural Law Center.

“Producers may finance their operation with loans from commercial banks, processors, equipment dealers, input suppliers, the Farm Service Agency, or the Farm Credit System,” Eichenberger said. “Despite receiving financial assistance, a producer may still experience financial difficulties due to rising input costs, market changes, weather events, or disease outbreaks.  

“These financial stressors may leave the producer unable to generate enough revenue to pay off their loan,” she said. “When that happens, the path from loan default to collateral foreclosure may depend on the type of loan, collateral, loan agreement, or lender. The Farm Credit System, for example, has specific requirements for that situation.” 

The Farm Credit System is the largest agricultural lender in the U.S., comprised of a nationwide network of cooperative banks and institutions, established by the Farm Credit Act of 1971. 

“When a borrower enters into a loan agreement with a Farm Credit lender, they are legally obligated to follow the repayment schedule and pay back the loan principal and accrued interest,” she said. “Unfortunately, situations may arise that cause the borrower to miss a loan payment, or to fall behind in their payments.” 

To read the full news article, click here.

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