KC Fed: Fewer New Loans to Farmers

Clint Thompson Economy

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Fewer new loans to farmers continued to drive a pullback in agricultural lending activity. The Kansas City Federal Reserve Bank reported this week that stronger prices for agricultural commodities, alongside continued support from government payments, may have reduced financing needs for some farmers and contributed to the slower pace of lending.

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A historically low number of new loans contributed to an increase in average loan size and drove a slight decrease in the overall volume of non-real estate loans at commercial banks in the fourth quarter. Changes in the average size and number of loans were generally consistent across all types of loans. For all lending purposes, the number of loans decreased, and the average loan size increased.

While there were fewer loans for all purposes, operating loans continued to comprise the majority of non-real estate lending and accounted for over half of the overall decline. Interest rates on agricultural loans remained at historically low levels in the fourth quarter.

(From the National Association of Farm Broadcasters)