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More stress on the agriculture lending environment

An agricultural economist says the ag lending environment is showing signs of stress.

Nathan Kauffman with the Federal Reserve Bank of Kansas City says the agricultural economy is seeing heightened loan demand and slower repayment rates.

But, he says, “We haven’t seen delinquency rates pick up noticeably, however they have picked up a little bit.”

He tells Brownfield farmers are becoming more reliant on credit to run their operations and that is causing additional pressure to build in the ag-lending sector.  “I would describe it as relatively modest pressure still at this point,” he says.  “But, I think as we look at some of those longer term trends it’s worth trying to get a handle on where things may be over the longer term rather than just next year. Especially as we see some of these conditions persist.”

Kauffman says lenders have recognized the heightened risk for farm loan portfolios and then lending environment won’t get any easier for farmers.

Kauffman presented at the Federal Reserve Bank of Chicago’s Agriculture Conference.

AUDIO: Nathan Kauffman, Federal Reserve Bank of Kansas City