Ag credit conditions are getting better

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Ag credit conditions are getting better

A Kansas City Federal Reserve Bank economist says agricultural credit conditions are improving. 

Vice President and economist Nathan Kauffman tells Brownfield he has seen the improvement in credit conditions for about six to nine months, and there are many factors that led to the stronger financial outlook. “The rapid increase in prices, of course, government payments from last year that had helped, farm finances, and that environment really has continued this year as in many segments of the farm economy, prices and profits have remained pretty strong.”

Kauffman says loan repayment rates are up, and higher land values are helping most farmers but he’s monitoring the severity of the drought in some sectors. “Certainly, the cattle industry is one that we’re watching closely. The dairy industry is another. Anywhere that feed costs are especially high and concerning in some places, those are areas that we’re mindful of where there might be a bit more credit stress.”

Kauffman says many farmers have been working to pay down debt and improve farm liquidity this year, but he’s also seeing increased spending on things that were put off during tougher times like land or facility investments.  Kauffman says interest rates have also fallen steadily since 2019 from around 6.75% to below 5%, and below 4.5% for land.

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