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K.C. Fed: Farm lending continues to moderate

Lending activity at ag banks in the Federal Reserve’s Tenth District—the Kansas City District—continued to decline in the first quarter of 2017.

Fed economist Nathan Kauffman says lower input costs have helped. And he says both borrowers and lenders continue to adjust to persistent weakness in the ag economy.

“I think it’s just being cognizant of what working capital means in terms of an operation and being careful so as to not become overextended,” Kauffman says.

Another positive, he says, is the continued low rate of farm loan delinquencies.

“We haven’t seen a notable pickup. It’s been very modest so far. So I think it’s given producers lots of time to be able to make adjustments where necessary in looking at the long-term.”

Kauffman says some ag lenders have also been willing to extend loan maturities for farm borrowers, but in some cases may have also increased interest rates to compensate for additional risk.

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

Link to K.C. Fed’s latest Ag Finance Databook report

AUDIO: Nathan Kauffman

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