February 19, 2020

Farm Credit Conditions Tighten

Reuters writers¬†P.J. Huffstutter and Justin Madden reported today that, “As the U.S. farming sector enters the third year of a downturn caused by a global glut of grains and slumping commodity prices, bankers across the Midwest are starting to tighten lending conditions and even cutting some clients off.

Many corn and soybean farmers already are trying to adjust by selling off grain stockpiles, begging landlords to reduce rents and pleading with bankers to restructure debt and give them more time to pay it back.

“But bankers are worried about the potential of loan defaults as incomes fall, prompting farmers to take on more debt. U.S. farm debt, adjusted for inflation, is now at the highest levels since the nation’s agricultural crisis in the 1980s, when scores of rural banks failed.”

The article noted that, “But bankers now are saying no to clients they may have backed during the recent boom times, according to farmers, economists and interviews with nearly three dozen lenders.

“Some are requiring customers to put more cash down for land or equipment purchases; others have suggested farmers update their resumes.”

On Wednesday, the House Agriculture Committee will hold a hearing on the state of the Rural Economy.

Keith Good