Most agricultural bankers in the Federal Reserve Bank of Kansas City District reported solid credit conditions in the second quarter of 2014, but longer-term concerns about credit quality have begun to emerge, according to a report by Nathan Kauffman, Omaha Branch executive and Maria Akers, associate economist.
“Although bankers reported very few past-due farm loans, loan repayment rates have weakened since last year, particularly in crop-producing regions. Credit standards, however, were little changed, and bankers indicated funds were available to satisfy a sharp rise in loan demand,” the economists said in their report, issued Aug. 14.
Despite continued strength in the livestock sector, District farm income remained well below year-ago levels due to falling crop prices and poor winter wheat yields. Cropland values generally held at high levels while strong demand for high-quality pasture pushed ranchland values higher. With summer rains easing drought conditions, the potential for record crop production this fall could keep prices low and shrink profit margins further, potentially affecting future debt repayment capacity. [Read More]
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