KC Fed: Fewer loans issued to farmers limits overall lending activity

by | Oct 26, 2020 | 5 Ag Stories, News

The Kansas City Federal Reserve says a slower pace of farm financing activity continued in the third quarter of 2020. The total volume of non-real estate farm loans remained subdued amid ongoing weakness in the ag sector, thanks in part to developments regarding COVID-19.

The National Survey of Terms of Lending to Farmers says despite growing 15 percent from the previous year, total non-real-estate loan volumes in the third quarter of 2020 were below the 20-year trend for that period. Loans for operating expenses increased from last year but were still less than the previous three years. Loans to finance feeder livestock and farm machinery followed a similar trend, while the volume of loans for other livestock remained steady.

All other loans declined for the second straight year, further weighing down the overall loan volumes. The number of new loans originated to farmers also declined for nearly all loan types. The total quantity of loans issued to farmers decreased, driven by a 12 percent decline in the number of operating loans.

Like the prior quarter, government payments and lending programs may have offset both declines in farm revenues and financing needs of some farm borrowers in the third quarter.