The impact of interest rates increases on ag

A farm finance specialist says the recent interest rate increase could impact farmers cost structure.

Matt Monteiro with Farm Credit Mid-America says earlier this week the Federal Reserve increased the interest rates by a quarter-of-a-percent.

While the increase was widely anticipated – it does put added pressure on farmers who are already facing a tight ag economy. “It’s going to more so impact their operating lines of credit, short-term lending – particularly for inputs like seed and fertilizer for example,” he says.

He tells Brownfield long-term rates still remain at or near historical lows, but the Federal Reserve indicated at its latest meeting that could change.  “Of course any increase is not appreciated as far as financials go and the increased cost for the operation,” he says.  “However, if you have an opportunity to lock in interest rates – you want to go ahead and do that if possible.”

Monteiro says the Federal Revere based their decision on what is projected to be a stronger economy with a decline in unemployment and an increase in price stability.

He says he anticipates one more interest rate increase this year.

AUDIO: Matthew Monteiro, Farm Credit Mid-America

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