Results of a joint survey point to a decline in farm profitability in the last 12 months.
The combined effort of the American Bankers Association (ABA) and the Federal Agricultural Mortgage Corporation surveyed more than 580 agricultural lenders, outlining the manner in which a high percentage of agriculture lenders continue to report a decline in farm profitability.
ABA and Federal Agricultural Mortgage Corporation officials said the Farmer Mac Agricultural Lender Survey seeks to provide a look at the agricultural economy and market forces from the unique perspective of ag lenders representing institutions of all sizes across the country.
“We were encouraged to see that lenders remain ready to assist farmers and fulfill their credit needs despite the drag in the agricultural economy,” Brittany Kleinpaste, ABA’s director of economic policy and research, said. “Overall, the data showed that agricultural lenders are a little more optimistic about what’s ahead for their customers than they were in December of 2016.”
With regard to land values, officials said respondents exhibited more confidence in stable land values than in the December 2016 survey. Fifty-seven percent of respondents reported stable values in the first half of 2017, and 51 percent expected no major changes in the second half of 2017.
Within the last six months, officials said the majority of lenders noted an increase in the demand for agricultural operating loans while there was no notable change in the demand for agricultural real estate loans in comparison to the previous survey. In the next six months, 53 percent of lenders expect a continued increase in agricultural operating loan demand and 60 percent expect demand for agricultural real estate loans to remain unchanged.
The survey also revealed lenders indicated credit quality and deterioration of agricultural loans are their top concerns, with competition from other lenders also ranking among lenders’ top concerns facing their institutions, particularly in the South.