Lending activity at agricultural banks across the country continued to decline in the first quarter of 2017. A report from the Federal Reserve Bank of Kansas City says economic conditions in the farm sector are still weak, so borrowers and lenders have worked together to make adjustments in financing agricultural production across America. Ag lenders are making more adjustments to loan terms because of heightened risk in the ag sector. For example, the report says revenues from agricultural production are expected to decline again in 2017. Farm incomes from corn, soybeans, wheat, and cattle, are expected to drop by five percent compared to 2016. Some producers are making adjustments in the cost of their inputs when they can. The reduced amount of producer spending likely has contributed to reductions in the volume of new farm loans. The overall volume of non-real estate farm loans in the first quarter of this year dropped 16 percent from 2016.
The Survey of Terms of Bank Lending to Farmers showed the decrease in the first quarter as the sixth consecutive year-over-year decline in the volume of new non-real estate farm loans and followed a significant drop in the fourth quarter of 2016.
Source: NAFB News Service