farm loans
A note from Chuck
Half a century ago, in 1973, I entered the news business as a reporter for a small weekly paper in Missouri. And now, it’s time to leave the party. I will continue my reporting here at Ag Insider through the end of the current Congressional session, at which time Ag Insider will be put to bed one last time. The final edition will go out Monday, December 23.
Farm income declines in northern Plains, say ag bankers
The two-year decline in commodity prices drove down farm income in the northern Plains this summer, ag bankers said overwhelmingly in a survey by the Minneapolis Federal Reserve Bank, and they expect income to fall again this winter. Farmers have cut back on major purchases and loan demand is up, the bankers said.
Farmers need ‘significant’ federal help to survive drop in income, say senators
“One in five farmers could be pushed out of business by the sharp drop in farm income this year,” said Mississippi Sen. Cindy Hyde-Smith at a Senate hearing on disaster aid, and Arkansas Sen. John Boozman asked how rural America could survive the combination of high production costs and lower commodity prices without “significant help” from the government.
Surge in million-dollar operating loans to farmers
Ag bankers reported more than 40 percent growth in the volume of new operating loans during the summer compared to the third quarter of 2023, said the Kansas City Federal Reserve Bank. "For the first time in at least two decades, the volume of loans larger than $1 million eclipsed the volume of loans smaller than $1 million," said the regional Fed, based on a survey of banks across the nation.
Land values rise while farm income shrinks in northern Plains
Continuing a four-year trend, land values rose during the growing season in the northern Plains, despite financial tightening in the farm sector, said ag bankers in a quarterly survey by the Minneapolis Federal Reserve Bank.
Farm income is down in Plains, say ag bankers
More than six of every 10 ag bankers in a Kansas City Federal Reserve Bank survey said that farm income was lower than a year ago and demand for loans was up. “Strong cattle prices have supported profit margins in the cattle sector, but prices for crops have declined faster than production expenses,” said the regional Fed on Tuesday.
USDA to be more flexible on farm loans
The Agriculture Department will amend its farm loan rules, effective Sept. 25, to allow more flexibility in repayment terms for producers and to reduce the collateral required when they borrow money. “Implementing these improvements to our farm loan programs is the next step in our ongoing commitment to removing lending barriers,” said Zach Ducheneaux, administrator of the Farm Service Agency, on Wednesday.
Biden announces $2 billion in USDA discrimination payments
The government has issued $2 billion in payments to more than 43,000 farmers who suffered discrimination when they applied for USDA farm loans in the past, said President Biden on Wednesday. More than half of the recipients were producers in Mississippi and Alabama, who received a combined $905.5 million.
Interest rates rise faster than farmland values, says economist
For the first time since 2001, interest rates are rising faster than farmland values, creating a potential obstacle to land purchasers, said assistant economist Ty Kreitman of the Kansas City Federal Reserve Bank. “With interest costs now above average land value appreciation, farm operating profits will determine the magnitude of returns for financed land,” he said.
High interest rates discouraging farmers from borrowing money
Ag bankers say farmers are tapping their savings from recent boom years instead of borrowing money at what are the highest interest rates since 2007. The average operating loan issued this past summer was nearly 20 percent smaller than the average a year ago, the lenders said in surveys by regional Federal Reserve banks.
Farm finances are strong despite moderation in ag economy
Agricultural credit conditions are likely to remain strong through the end of this year, although bankers expect farm income and loan repayment rates, now the healthiest since 2010, to soften in the months ahead, said the Kansas City Federal Reserve on Thursday.
High interest rates fall heaviest on less-profitable farmers
Interest rates doubled in the past year for agricultural loans, the fastest increase since the early 1980s, with the least-profitable farmers feeling the impact the most, said the Minneapolis Federal Reserve Bank. “All producers should prepare for elevated interest rates by incorporating higher interest expenses into cash flow projections regardless of profitability and debt levels,” it said.
High costs and softer markets weigh on outlook for farm economy
With interest rates sharply higher, farmers are increasingly relying on savings or tightening their belts instead of seeking bank loans to cover their expenses, according to ag lenders nationwide. “The outlook for the U.S. farm economy has moderated in recent months as risks of more limited profit opportunities have grown alongside softening in commodity markets and elevated production expenses,” said the Kansas City Federal Reserve Bank.
Farmers face sharply higher interest rates on loans
The financial outlook for many farmers is favorable, thanks to high commodity prices, but higher interest rates are an ongoing concern, according to ag bankers surveyed by the Federal Reserve. Interest rates on loans to farmers were 3.5 to 4.5 percentage points higher in the opening months of this year than they were at the end of 2021.
Fed report: Highest financing expenses since 2019 for farmers
Headwinds are intensifying for the farm sector, although high commodity prices support a positive outlook for farm finances through the end of this year, said a survey of ag bankers on Thursday. Alongside increased loan volume during the summer, “interest rates rose sharply and pushed financing expenses to the highest level since 2019.”
USDA earmarks $1.3 billion for debt relief to distressed farmers
Financially distressed farmers have received $800 million of an anticipated $1.3 billion to reduce their debts on USDA farm loans, said Agriculture Secretary Tom Vilsack on Tuesday. "Today, I've got to think there are thousands of producers out there who can breathe a little easier," he said during a teleconference.
Farmers feel less need to borrow money from the bank
The strong agricultural economy, fueled by high commodity prices, has reduced farmers' reliance on farm lenders, despite concerns about rising input costs, according to a Federal Reserve survey of ag bankers. "Higher costs are likely to put upward pressure on demand for credit, but strong farm income and working capital could also supplement financing for some borrowers," said the Kansas City Fed on Thursday.
Farm income high, except for cattle
Elevated commodity prices supported farm income and kept the U.S. agricultural economy strong into this autumn, said the Kansas City Federal Reserve Bank on Wednesday. "Prices of most major crops were at multiyear highs moving into fall harvest and supported farm revenue prospects," wrote economists Nathan Kauffman and Ty Kreitman.