Steve Jobs once commented that “Consumers are the biggest beneficiaries of competition. It forces businesses to deliver better products, lower prices and more choice.”
For farmers and ranchers there is almost certainly going to be more competition for their business by lenders in the months and years ahead thanks to provisions in the recently passed “Big Beautiful Bill.”
These provisions allow smaller FDIC-insured banks serving rural communities to enjoy tax exemptions on interest earned from ag-related loans, just as non-bank farm lenders have enjoyed for decades.
You might be thinking, “How will a tax benefit for banks help farmers and ranchers?”
To begin with, it will allow banks that were already providing ag loans to better compete with government-sponsored entities that focus solely on the agricultural sector. This is not to say that banks haven’t been able to compete, as evidenced by the fact there are three Arkansas-based banks ranked in the top 25 of U.S. bank farm lenders in the first quarter of 2025 as reported by the American Bankers Association.
Secondly, the tax provision will almost certainly lead to more banks choosing to enter, or expand their interest in, lending to local farmers and ranchers. Simply put, when banks can earn tax-free interest income on a certain type of loan, they will naturally want to make more of those loans and pass that savings along to the borrower.
As Mr. Jobs said, the biggest beneficiaries of competition are consumers – in this case, the local farmers and ranchers operating throughout Northwest Arkansas.
The act also includes a provision for mortgages in small rural towns and communities that might help increase competition and potentially lower mortgage interest rates for many home buyers. As the owner of a cattle ranch in an unincorporated area of Northwest Arkansas, I’ve witnessed a growing number of businesspeople building homes around my property.
Depending on several factors, including the amount of a mortgage they may carry on these rural properties, their home lenders may qualify under these provisions for a portion of their mortgage interest to be tax-exempt, too. This provision is a bit more complex and not yet clearly defined, so I would suggest to anyone planning to take out a mortgage on rural property to visit with a bank and lender who is well-versed in the details.
In the midst of a challenging year for the farms and farm families that grow our food, any help economically is welcome news. I know the ag lending team at Arvest has strong and deep relationships with many ag producers, and we have been working this year to provide the resources and expertise they need to navigate the current market dynamics. Of course, other banks and lenders are working to do the same.
When our ag community is being challenged from multiple sides, whether it be the rising costs for feed, seed and supplies, lower sale prices, extreme weather conditions or all of the above, we all need to be mindful of the important role these ag producers play in our lives.
The next time you go to your local farmers market or sit next to a farmer or rancher at a diner, give them a word of encouragement and tell them how much they are appreciated for the hard work they do to put food on your plate.
Between that and the increased competition they will enjoy as a result of these tax provisions, it might make their long days more productive and enjoyable. And they deserve it.
Editor’s note: Levi Price is the head of agri-finance for Arvest Bank and operates a ranch west of Gravette in Benton County. The opinions expressed are those of the author.