KC Fed: Midwest Ag Credit Conditions Deteriorating

Agriculture credit conditions in the Midwest continued to deteriorate in the second quarter of 2016 as farm income remained subdued. That’s according to the Federal Reserve Bank of Kansas City’s Survey of Agricultural Credit Conditions released Thursday.

Nearly 75 percent of bankers within the seven-state 10th District of the Federal Reserve Bank in the Midwest reported farm income was less than a year ago. Persistent declines in farm income have continued to pressure agricultural credit conditions, according to the survey. The KC Fed also notes demand for non-real estate farm loans and loan renewals continued to climb as slimmer profit margins pull down the rate of loan repayments.

Almost half of all respondents reported loan repayment rates in the second quarter were lower than a year ago. Although bankers continued to report ample credit was available for borrowers who are in a strong financial position, the higher rate of loan denials suggests the number of farm borrowers who are less creditworthy has increased over the past year.