Farm Lending Activity Remains Robust According to Ag Finance DatabookMon, 25 Apr 2016 20:03:47 CDT
Farm income remained suppressed in the first quarter of 2016, keeping farm lending activity high, according to the Federal Reserve’s Agricultural Finance Databook.
Although non-real estate farm loan volumes declined modestly from a year ago, the number of loans originated increased slightly and the volume of loans remained near record highs. Large loans used to finance operating expenses remained the primary driver of demand for non-real estate loans.
Returns at agricultural banks generally remained strong, but delinquency rates on farm loans ticked up and loan repayment rates dipped, as persistently weak profit margins in the farm sector continued to intensify the challenge of maintaining adequate cash flow.
Though farmland values have remained relatively strong, a poor outlook for cash flow could continue to pressure a larger share of farm borrowers in the coming year, particularly those most highly leveraged.
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/agfinancedatabook.
Source: Federal Reserve Bank of Kansas City
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