Survey: Ag Lenders Concerned About Current Credit Conditions

A recent survey by the Federal Reserve Bank of Kansas City concludes that agricultural lenders in the western Corn Belt are increasingly concerned about the credit worthiness of ag borrowers as the farm economy weakens, Brownfield reports.
Brian Briggeman, an economist with the Fed’s Omaha branch, said commercial banks have tightened credit standards. “They’re making sure that if they do need the credit, or extend the credit, that’s it done appropriately that there are earnings there to pay it back.”

The struggling livestock and dairy sectors are of particular concern to bankers. Briggeman said, in general, farmers have become more frugal with their spending because of the current volatile ag economy. The survey also indicates that farmland values appear to have stabilized after some modest declines at the end of 2008. “The high quality farmland is still bringing a strong price — but a lot of that land that’s maybe marginal, there’s just limited buyer interest that’s out there,” Briggeman said.

The bank’s district includes Nebraska, western Missouri, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico.