Fed's Finance Databook Says Capital Spending Slump Drags Down Farm LendingThu, 23 Jan 2014 16:36:28 CST
A slowdown in lending for capital purchases contributed to lower farm loan volumes in the fourth quarter of 2013, according to the Federal Reserve's Agricultural Finance Databook.
According to national survey data collected during the first full week of November, the volume of loans for farm machinery and equipment purchases dropped to the lowest level in more than two years, despite attractive loan terms of low interest rates and longer average maturities.
Strong incomes and a drop in key production costs also limited the need for short-term financing to the farm sector. A rebound in crop production in most regions helped offset a sharp drop in corn prices at harvest, keeping farm income relatively high. In turn, lower corn prices reduced feed costs for livestock operators.
Farm real estate lending eased during the fourth-quarter survey period. While farmland values generally were still rising, agricultural bankers reported gains had moderated from the brisk pace of the past few years. Most bankers felt that farmland values would hold steady at high levels heading into 2014.
The Agricultural Finance Databook is a quarterly compilation of national and regional agricultural finance data. The complete release is available at www.kansascityfed.org/research/indicatorsdata/agfinance.
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