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KC FED REPORT: FARM LENDING SOARS AT COMMERCIAL BANKS
Source: Federal Reserve Bank of Kansas City news release

Farm lending at commercial banks accelerated in the fourth quarter of 2012 after solid gains in previous months, according to the Federal Reserve System's Agricultural Finance Databook.

Escalating feed and livestock costs contributed to higher lending activity to livestock operations. In addition, high fuel costs during harvest and rising fertilizer and seed prices prompted some crop producers to pre-pay for 2013 crop inputs, which boosted current operating loan volumes even higher.

Banker survey respondents also reported a fourth-quarter spike in farm machinery and equipment loans. After picking up in the third quarter, lending for farm machinery and equipment surged as farmers made capital purchases prior to the potential expiration of the tax incentive for accelerated depreciation at the end of 2012.

With ample funds for farm loans, strengthening loan demand fueled intense competition for agricultural lending activity among financial institutions.

The Agricultural Finance Databook is a quarterly compilation of national and regional agricultural finance data. The complete release is available at www.kansascityfed.org/research/indicatorsdata/agfinance. For additional research on the agricultural economy visit
www.kansascityfed.org/research/regionaleconomy/agriculture.cfm.


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