Farm loan delinquencies declining for first time since 2014

Farm loan delinquencies are trending lower for the first time in several years.

Nathan Kauffman with the Federal Reserve Bank of Kansas City says the delinquency rate had been on the rise from 2014 to the beginning of 2020.

“Albeit at a fairly gradual pace overall, alongside some of the low commodity prices.”

He tells Brownfield expectations going into last year were for additional delinquencies, but the rise in commodity prices and government support payments helped stem the tide.

“So there’s actually been a little bit of a decrease in debt corresponding to some of the improvements in farm finances recently.”

Kauffman expects the farm economy to further strengthen this year, but says the outlook for 2022 and beyond is very uncertain.

“A lot of farmers are concerned about cost, and ultimately what those might mean for profit margins going forward.”

And he points out not all sectors of agriculture are improving equally.  Kauffman says cattle producers are stressed by thin profit margins and worsening drought conditions in many parts of the country.

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