Tuesday, May 21, 2024
HomeAg NewsFarm Lending Slows as Interest Rates Climb

Farm Lending Slows as Interest Rates Climb

Farm lending activity at commercial banks in the Kansas City Fed’s district slowed through the first half of 2023 as interest rates continued pushing higher.

The volume of non-real estate farm loans at commercial banks declined for the second-consecutive quarter. The survey of commercial banks shows the volume of non-real estate loans was 15 percent below last year, and the drop was attributed to a lower average size of loans and a smaller number of loans compared with 2022. The average interest rates on agricultural loans increased for the sixth-consecutive quarter.

The U.S. farm economy outlook has moderated in recent months as risks of more limited profit opportunities have grown alongside softening in commodity markets and elevated production expenses. Broad strength in farm finances has continued to support historically-strong loan performance, but farm profitability will remain important for agricultural credit conditions and lending demand in the coming months.

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