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.
Ag bankers are charging higher interest rates and asking farmers to pledge more collateral in the face of a rising demand for loans, the Federal Reserve said Thursday in its quarterly Agricultural Finance Databook.
About half of the USDA’s local offices will be open for three days, beginning Thursday, to deal with existing farm loans and provide tax documents to farmers and ranchers. USDA employees will not consider applications for new loans, the new dairy support program, disaster relief, or Trump tariff payments.
Farmers typically try to stretch their dollars during the summer in the expectation that payday will arrive with the fall harvest. Not this year. Ag bankers report the largest summertime increase in non-real-estate loan volume in 16 years and it was driven primarily by demand for operating loans to pay day-to-day expenses, said a quarterly Federal Reserve report.
Agricultural bankers are slowly raising the interest rate on loans to farmers and ranchers, with the largest increases on the short-term operating loans that account for 60 percent of new, non-real estate farm loans at the banks, said the Ag Finance Databook published by the Kansas City Federal Reserve Bank. "Although farm debt also has continued to rise alongside higher rates, the increase in interest expense has remained relatively small."
Commodity prices are still in a trough but U.S. farm income is on the rise for the first time since 2013 because producers are sending more crops and livestock to market than initially expected, said the USDA. It forecast net cash farm income, a measure of liquidity, of $100.4 billion this year, far stronger than the February forecast of $93.5 billion, but only three-fourths of the record set in 2013.
African-American farmers lost millions of acres of land across the South as a result of an obscure legal provision that is only now being corrected in state legislatures around the country, according to FERN’s latest story by Leah Douglas produced in partnership with The Nation magazine. (No Paywall)
Agricultural bankers say farmland values in the Midwest were 3 percent lower this fall than a year ago. And the decline is expected to continue this fall due to weaker demand for farmland thanks to a prolonged slump in commodity prices, said the Chicago Federal Reserve Bank’s November AgLetter. …
In order to meet stronger-than-expected demand, the USDA will tap a $500-million discretionary fund so it can continue to issue loan guarantees for farm ownership, reported Agri-Pulse. Congress allotted $2 billion for the guarantees for this fiscal year but sharply lower farm income has prompted banks to ask for more federal loan guarantees, said Agri-Pulse.
"There's a lot of doom and gloom in the air about the state of the farm economy," says a report by the Environmental Working Group, and much of it is a campaign for larger crop subsidies. "The farm subsidy lobby has been working overtime to sue what it calls a 'farm crisis' to deflect well-deserved criticism of the fatally flawed federal subsidy program that they're desperate to protect."