The Kansas City Federal Reserve released its second quarter Ag Finance Databook earlier this month.
Among the findings:
- The pace of farm lending at commercial banks was steady in second quarter 2017.
- The volume of non-real estate farm loans originating in the second quarter increased less than 4%. Declines in farm income have likely slowed the volume.
- Farm loan volumes at commercial banks with sizable farm loan portfolio rose about 7% from last year, while volume of new farm loans in banks with smaller farm loan portfolio declined from year earlier.
- Interest rates on loans for operating expenses, farm machinery and other livestock have increased 25 to 50 basis points from a year ago.
- Lenders have lengthened maturity periods for non-real estate farm loans. Maturities have increased to 35 months, up from 23 months from 2007 to 2014. The increase is likely designed to improve cash flow for borrowers.
- Delinquency rates for both farm real estate and non-real estate farm loans edged to about 2% for the first time since 2013 and 2012, respectively. However, delinquency rates have remained near their 10-year averages and less than the average rate for all bank loans.
- Borrowers' demand for financing has remained strong. Demand for farm loan renewals and extensions remained elevated in each Federal Reserve district for the ninth consecutive quarter.
- Farmland values have continued to decline. The largest declines have been in the Mountain states, South Dakota and Kansas, where there is a greater reliance on wheat and cattle. Bankers in southern Wisconsin, Texas and Iowa reported slight increases.
Source: Federal Reserve Bank of Kansas City