The Farm Credit System’s quarterly report says stress levels are still high in the ag sector of the economy. In fact, the operating report says stress levels are high in many different sectors of agriculture. Farm debt levels are still high, while cash receipts continue to decline. Interest rates remain low, but are slowly beginning to rise. That is combined with commodity prices that will remain low thanks to record or near-record production in corn, soybeans, and wheat. All of these factors are putting downward pressure on farmland prices. High production numbers are also weighing down price and profit margins in the dairy and protein industries.
Overall, the quarterly reports say the Farm Credit System is financially sound and safe, well set against the risky environment in agriculture. The System reported modest loan growth, favorable earnings, and higher capital levels in the first nine months of 2016. The System’s portfolio loan quality is in good shape, but credit risk measures are showing increasing stress.
Source: NAFB News Service