KANSAS CITY, M.O. (NAFB) – Farm loan demand remained muted at commercial banks in the first quarter of 2021.
The Kansas City Federal Reserve Bank reports that a reduction in the volume of operating loans led to an overall decline in total non-real estate lending. Financing activity also declined more notably at banks with relatively large farm loan portfolios, while lending was more stable among small and mid-size lenders.
The KC Fed says factors specific to the pandemic in 2020 likely contributed to the reduced lending activity as the year progressed. Substantial government aid through various programs in 2020 provided financial support. In addition, the Small Business Administration’s Paycheck Protection Program accounted for a sizable share of loans reported, and likely displaced a portion of typical financing needs.
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Farm lending pullback continues
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Pierre, SD, USA / DRGNews
Mar 4, 2021 6:34 AM
Farm income and agricultural credit conditions improved significantly in the fourth quarter according to agricultural lenders across major portions of the US.
Despite turbulent conditions related to the ongoing pandemic, prices of several agricultural commodities increased sharply in the final months of the year. Dramatic improvements in crop prices drove the sharpest turnaround in agricultural lending conditions in more than a decade, according to the Kansas City Federal Reserve Bank.
On average, farm loan repayments increased for the first time since 2013. The rate of loan repayment increased from a year ago in all participating Federal Reserve Districts except Dallas, with the fastest pace of increase reported in the Minneapolis and Chicago Districts.