State of the Farm Lending Industry in the U.S.

Concerns over low commodity prices have hurt not only the farmer, but the farm lending industry as well.

Nathan Kaufman of the Federal Reserve Bank spoke to a Senate Ag Committee last week.

“Alongside the reductions in farm income the past four years, agricultural credit conditions have weakened steadily and farm real estate values have trended lower.”

Profit margins have varied depending on commodity, prices received for crops and productivity.

Kaufman said there has been only moderate declines in land values though, so that has allowed some producers to find ways to borrow.

“The strength in land values has given agricultural lenders some opportunities to work with borrowers by restructuring loans and requesting additional collateral in response to heightened risk in their loan portfolios.”

Farm land value accounts for about 80 percent of collateral in borrowing.

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