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Agricultural News

Federal Reserve Bank Releases Agricultural Finance Databook

Wed, 20 Jul 2011 11:10:32 CDT

The Federal Reserve Bank of Kansas City recently released the latest Agricultural Finance Databook.


Spurred by higher input costs, agricultural lending activity increased in the second quarter, according to the Federal Reserve System's Agricultural Finance Databook.


After contracting at the beginning of the year, the total volume of farm loans at commercial banks ticked up as farmers and feedlot operators borrowed to pay for higher priced fuel, fertilizer and feed during the second quarter. Higher input costs increased the size of individual farm loans, supporting stronger loan growth at larger agricultural banks.


In contrast, intermediate-term loans for machinery and equipment purchases contracted during the second quarter. With rising input costs, farm income expectations eased and capital spending in the farm sector cooled. As a result, loan volumes for farm machinery and equipment dropped below year-ago levels, shrinking loan portfolios at small and mid-sized agricultural banks.


Despite higher costs for farm inputs, profits at agricultural banks strengthened in the first quarter, tripling the rate of return at other small banks. Still, a first quarter uptick in farm loan delinquency rates poses a slight risk to future profits.


Commodity prices and farm profits remained elevated in the first quarter, fueling additional gains in farmland values. The strongest land value gains emerged in the Corn Belt, where cropland prices jumped more than 20 percent above year-ago levels in many states.


The Agricultural Finance Databook is a quarterly compilation of national and regional agricultural finance data. The Federal Reserve Bank of Kansas City produces a publication that summarizes the data. Summaries of each of the following sections are included in the publication:


-Section A - Second quarter national data on term lending to farmers from surveys conducted by the Federal Reserve System

-Section B - First quarter Call Report data on national agricultural lending and agricultural bank failures

-Section C - First quarter data on agricultural land values and credit conditions from surveys conducted by regional Federal Reserve Banks



Click here for a copy of the complete Agricultural Finance Databook.


   

 

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