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Farm Lending Needs Remain High

Dan General, Industry News Release

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The Federal Reserve Bank reports the need for farm lending remained high in the second quarter of 2016, driven by ongoing demand for operating loans. The Federal Reserve’s Agricultural Finance Databook found the total number of non-real estate loans made to farmers in the second quarter increased six percent from a year ago.

The report says the prolonged environment of robust lending activity, amid persistently weak profits in the farm sector, has led to slight reductions in the performance of agricultural loans at commercial banks. Although the share of troubled loans has remained low from a historical perspective, the Fed says an increase in loans 30 to 89 days past due could be an early indication that borrowers are struggling to repay loans in amid tight profit margins. Despite the slight declines in loan performance and heightened risk, however, profitability at agricultural banks generally has remained strong, according to the report. The Agricultural Finance Databook is a quarterly compilation of national and regional agricultural finance data by the Federal Reserve Bank.

From the National Association of Farm Broadcasting news service.