The economy is in a tough spot across the board, no matter how government officials want to try and spin it. Interest rates are climbing higher and that is causing problems for borrowers, especially in the agriculture sector. Agricultural operating loans, land loans, and financing are usually working with some very large numbers, and when you combine that with rising interest rates, those payments are starting to get larger.
According to Tait Berg, a Senior Agricultural Analyst at the Federal Reserve Bank of Minneapolis, we are seeing interest rates that have doubled in the past two years.
In his district, there hasn’t been an increase like this since back in 2007, and we all know how the economy was doing at that point. That was when we were talking about housing bubbles and high gas prices.
When crunching all these numbers he talks about the fact that in just one Fed district, Ag loans are costing over $800 million in interest payments alone. That’s an increase of roughly $350 million in one year.
These numbers already add to an ever-shrinking profit margin that is affecting producers all over this country. But remember, there is no economic problem. Everything is just fine. That’s what some folks in D.C. would like you to believe.
