Ag lenders worry about liquidity, farm income more than inflation
The Fence Post
Agriculture lenders are worried about farmers’ liquity and their income levels, according to the 2023 Agricultural Lender Survey report produced jointly by the American Bankers Association and the Federal Agricultural Mortgage Corporation, more commonly known as Farmer Mac.
Inflation, the top concern for 2021 and 2022, fell to the third-biggest concern for ag bankers this year behind liquidity and farm income, Progressive Farmer/DTN noted in a detailed analysis of the report from the meeting in Oklahoma City.
The report was released today at the American Bankers Association Agricultural Bankers Conference in Oklahoma City.
“After a record-setting year of farm income, producers have experienced some margin compression in 2023 and lenders are taking notice,” said Jackson Takach, Farmer Mac’s chief economist.
“During economic cycle transitions, the fundamentals are increasingly important, and I think that’s why you see lenders rank balance sheet liquidity and farm income levels as their top concerns facing producers in the coming year.”
“Despite margin compression, agricultural credit quality remained strong in 2023,” said Tyler Mondres, senior director of research at ABA.
“Lenders expect a return to trend for credit quality in the coming year, which was reflected in a moderate increase in concern for ag loan deterioration. While lenders are taking prudent risk management steps in response, such as reviewing underwriting standards and loan terms, they are prepared to continue providing critical support to America’s farmers and ranchers.”
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