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Loan volumes rise as lower farm incomes persist

The Kansas City branch of the Federal Reserve reports agricultural loan volumes continued to rise in the first quarter of 2015.

A survey of bankers in the Fed’s seven-state Tenth District showed non-real estate farm loans were 8.1 billion dollars higher than the same period last year. The report says persistently low crop prices and elevated input costs continued to increase farmers’ short-term financing needs, and high prices for feeder cattle further boosted loan volumes in the livestock sector.

The bankers say that loan repayment rates are slightly weaker.  But despite reduced farm incomes and increased debt outstanding, loan delinquency rates declined and profits increased slightly at most agricultural banks.

Lower farm incomes also affected farmland values, but the changes varied widely among states. Farmland values in crop-intensive states decreased slightly, while demand strengthened for good-quality farmland and ranchland in states more concentrated in livestock production.

The Fed’s Tenth District includes Nebraska, Kansas, western Missouri, Colorado, Oklahoma, New Mexico and Wyoming.

Photo courtesy of The Sorghum Checkoff