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The impact of interest rate increases on agriculture

Borrowing money on long-term agricultural investments got a little more expensive.  The US Federal Reserve raised its base interest rate to 1 percent earlier this week.

But, Dennis Badger, vice president of collateral risk management for Farm Credit of Mid-America (which covers Indiana, Ohio, Kentucky, and Tennessee) says the situation for agriculture is still favorable overall.   “Based on reports from the Federal Reserve Open Market Committee, I don’t think there are any drastic changes that are projected,” he says.  “I think they’re taking this at a good, stable pace.”

The Fed raised interest rates in December of 2015 and again last December.

Badger says the market is expecting a few more increases to interest rates this year and is starting to build in its reaction.  “Provided that there are no significant surprises, than I think it is more or less going to be a natural, healthy progression,” he says.

And he tells Brownfield – that gives farmers who are positioned well room to grow and expand their operations.

AUDIO: Dennis Badger, Farm Credit Mid-America