Agricultural bankers are lending a markedly larger amount of money to farmers and ranchers, with loan volume up 11 percent from April, May, and June of last year, said the Federal Reserve on Thursday. It was the highest rate of growth in loan volume in the spring quarter since 2011.
The latest in a series of mergers that are remaking the business of farm credit in America will, in early July, bring together three lenders in the upper Midwest, AgStar Financial Services, Badgerland Financial, and 1st Farm Credit Services. The new Wisconsin-based institution, to be called Compeer Financial, will hold over $18 billion in assets and will be the country’s third-largest farm credit association.
Farm bankers across the Midwest and Plains say that the persistent slump in crop and livestock prices pulled down farmland prices, with further declines expected through spring.
Main Street businesses in the Plains are feeling the pinch of lower commodity prices while producers throughout the Farm Belt are watching their pennies, said quarterly reports from three regional Federal Reserve banks.
Farmers in the Midwest and Plains - the major regions for corn, wheat and soybean production - are borrowing money to pay short-term operating expenses because shrinking crop income makes it harder to pay cash, according to a survey of ag bankers.
Agricultural bankers in 10 states in the Midwest and Plains expect a 15-percent decline in farm equipment sales this year, says a survey by Creighton University, in Omaha.
Economists at the annual Ag Bankers Conference said crop growers will face more stress in 2015, says Farm Futures. "Some farmers may need to restructure debt to keep cash flowing the next two years, says...
Crop farmers are seeing much lower incomes this year, down by an average 25 percent in the Plains, according to agricultural bankers in the Farm Belt.
Cropland values are steady or starting to erode while ranch and pasture land is rising in value, say agricultural bankers in the Midwest and central Plains.
Farmers and ranchers are tightening their purse strings and spending less in town, say farm bankers across the Farm Belt. With farm income down due to sharply lower commodity prices, cutbacks are expected to continue into the fall at a minimum.
Agricultural banks say loan volume for feeder livestock rose by 50 percent in the second quarter of this year after rising by 13 percent year-over-year in the first quarter, according to the Federal Reserve in its Agricultural Finance Databook.