Farm Loans Soar as Ag Economy Deteriorates

According to a report from the Federal Reserve Bank of Kansas City, farmers are taking out loans at a rate and scale not seen in years as weakened crop prices weigh on the agricultural sector.  The report said the volume of new operating loans increased at its fastest pace since 2017, with commercial banks issuing 40% more of these loans to farmers over last year.  

Farmers are not only taking out more loans, but also borrowing higher amounts.  For the first time in at least two decades, loans larger than $1 million made up the majority of lending volume.  Growth in loan volumes was concentrated among small and mid-sized lenders, the Federal Reserve report said, underscoring difficulties for family farms and other smaller operations without deep pockets to weather the volatility.

Farmers are grappling with weakened global demand as well as decline in several commodity prices paid to producers.

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