Nov 12, 2019

Bankers: Only 57% of farm operations profitable in 2019
The Hagstrom Report

Lenders reported that just over 57% of their agricultural borrowers were profitable in 2019, according to a survey of 450 loan officers, managers and executives released by the American Bankers Association and Farmer Mac, the nation’s secondary market for agricultural credit.

When the survey was conducted between August 5 and September 6, 82% of respondents said that their customers’ profits were declining.

Lenders expect that 56% of their borrowers will remain profitable through 2020. Dairy, grains, and cattle were the sectors that concerned lenders the most, while lenders reported less concern for the swine, poultry, and vegetable sectors.

The survey was released Monday at the American Bankers Association 2019 conference in Dallas.

“Bankers are naturally concerned for their farmers and ranchers as the ag economy continues to regain its footing,” said ABA’s Chief Economist James Chessen.

“Bankers know the cycles of agriculture very well and will continue to work side-by-side with their customers as they have done in the past. While uncertainty has risen, banks are well prepared to continue their support for the ag community through these challenging times.”

“The farm profitability picture remains tight in 2019, and ag lenders see that come through in their customers’ financials,” said Farmer Mac’s Chief Economist Jackson Takach.

“However, America’s farmers and ranchers are adapting to the new economic reality, looking for new sources of income and increased efficiencies through technology adoption.”

Added Takach, “Ag lenders provide an important and unique perspective on conditions in the agricultural economy. The survey responses indicate muted expectations for the farm economy heading into 2020. While ag lenders remain concerned about farm liquidity and leverage, they do not expect major declines in land values and are optimistic for a high approval rate this coming loan renewal season.”

To view the Fall 2019 Agricultural Lender Survey Report Click Here.