Bankers reported a 10-percent increase in farm operating loans this summer, compared to a year ago, said the Kansas City Federal Reserve Bank. “A moderation in the agricultural economy and lower farm sector liquidity has spurred higher financing needs and credit conditions have also shown signs of tightening,” said the bank, based on quarterly reports from lenders.
“Growth in farm production loans stayed strong through mid-year as the agricultural economy continued to soften,” said the Kansas City Fed.
“However, despite inching slightly higher, delinquency rates on farm loans remained limited through mid-year.” About 1 percent of real estate and non-real-estate loans were at least 30 days past due, “a slight increase from record lows a year ago,” said the regional Fed. Roughly half of the increase was newly delinquent loans, 30 to 90 days overdue.
Real estate debt grew by 2 percent from mid-year 2023 and “has remained subdued following a substantial retraction in 2023,” said the bank in an Ag Finance Update.