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KC FED: AG FINANCE UPDATE: FINANCING OF AG PRODUCTION LOANS EASES FURTHER
Source: Federal Reserve Bank of Kansas City news release

To view the complete report, click here.

Farm debt at commercial banks continued to ease in the second quarter. Agricultural loans balances decreased by 5% from the previous year due to a relatively large decline in production loans.

Although farm lending increased at some banks, loan balances dropped by more than 10% from a year ago at a relatively large number of banks. Declines were most substantial among lenders with both the smallest and largest farm loan portfolios and among agricultural banks with high concentrations of farm loans.

The U.S. agricultural economy remained strong through the first half of the year and farm income was projected to reach an eight-year high in 2021. The quick recovery in farm finances from weakness in recent years has contributed to reduced levels of debt at commercial banks and is likely to continue supporting improvements in agricultural loan performance. In addition to stronger farm income and credit conditions, interest rates have remained at historic lows, providing ongoing support to farmland markets.


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