Ag Balance Sheets Good Today, but Will Endure Heightened Volatility
By Pro Farmer Editors
Rising interest rates and higher farm expenses will pressure farm finances ahead, according to the latest quarterly economic outlook published by ag credit lender Farmer Mac. When working capital declined from 2014 to 2018, farmers were able to utilize short-term financing at relatively low interest rates. “However, the average interest rate on agricultural production loans is 48% higher today than during that period,” the report says. Ag banks entered 2023 better positioned to confront the current economic period of rising interest rates than Silicon Valley Bank, which defaulted in March. “The rising and elevated interest rate environment may continue to stretch bank liquidity and cause financial stress, but ag lenders came into 2023 in an excellent position to endure heightened volatility,” the report concludes.
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