Fed: Farm Lending Picks Up in Q3

After dipping for the past three quarters, farm lending picked up in the third quarter of 2017, says data from the Federal Reserve.

The recent stabilization in lending activity suggests that borrowers and lenders have adjusted to reduced profit margins and spending.

The report from the Federal Reserve Ag Finance Databook also said:

• The volume of non-real estate farm loans originated in the third quarter increased by about 2 percent from the previous year.
   
• The volume of loans used to pay for current operating expenses increased 15 percent from the previous year, whereas the volume of loans used to finance livestock and equipment purchases declined.
   
• Operating loans have accounted for nearly 60 percent of the total volume of non-real estate farm loans over the past four quarters, the highest in the 40-year survey history. Conversely, the share of other loans has fallen to levels last seen in the early 1990s.
   
• The average maturity on loans used for operating expenses over the past four quarters has declined 4 percent from the previous year, but the duration has remained one of the highest in survey history at 12 months. Similarly, maturities for livestock and farm machinery loans have declined in recent quarters; despite the decline, maturities were both higher than the previous year and historically high.
   
• Bankers have raised the risk ratings slightly on new non-real estate farm loans.

Source: Federal Reserve Bank of Kansas City