Ag Lenders Expecting Headwinds Into 2019

What are Ag lenders expecting from the farming industry as we look ahead to a new year?

Brittany Kleinpaste, Vice President of the American Bankers Association said some are fearful a tsunami of money problems await the Ag industry in 2019.  But, she pointed out a recent Ag Rural Bankers Survey indicates that tsunami is unlikely.

“We have seen a little bit of an uptick in bankruptcies this last quarter, but overall farmers are working with their bankers, bankers still reported about the same number of borrowers still being profitable moving into 2019, but there are some strong headwinds.”

Kleinpaste said one of the strongest headwinds is the number of borrowers that bankers anticipate will be profitable into the New Year.  At the start of 2018, ABA expected 60% of borrowers to make money, that figure going into 2019 has dropped close to 50%.

She noted the survey was not entirely negative.

“We don’t see the same data when we ask the lenders about loan delinquencies.  Lenders suggested there was an adjustment in the way farmers were spending their money.  Part of it, going to make sure they’re repaying debt.  So, while [lenders] are reporting that nearly half of farmers are not going to be profitable in 2019, it doesn’t mean necessarily that they are going bankruptcy, it’s just an unprofitable year for the farm.”

Kleinpaste added there was some concern about stress on loan delinquencies going into 2019, but she noted that does not appear to true at this point.

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