Nov 14, 2019

Washington Insider — Wednesday: Unhappiness Over Trade Bailout Program
Progressive Farmer

By: DTN’s Washington Insider

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Ag Bankers Concerned About Credit Quality In Midst Of Farm Downturn

Even as 57 percent of farmer borrowers were profitable in 2019, up six percentage points from 2018, some 82.5% of ag lenders reported declines in farm profitability from all reporting regions in results of an ag lenders survey conducted by the American Bankers Association (ABA) and Farmer Mac.

Lenders listed credit quality, competition for loans and weaker loan demand as their chief concern, the report said, while producers listed liquidity, income and leverage as their top concerns. However, the report noted that “trade, tariffs and weather edged up on the list.”

Only 9.1% of respondents said that they expected increased profitability for farmers the next 12 months while 55.1% expected profitability to decline. As for specific ag sectors, the report said that dairy, grains and cattle were sectors of the most concern.

However, interest in financing for hemp and alternative energy were big of note, with 49.9% of lenders say farmers were asking about financing for hemp production and 36.8% inquired about alternative energy financing.

Some 49.6% of lenders expect land values to decline in 2020, with lenders reporting an average of 37.8% of land in their markets was above market value. “Lenders also expect compression in cash rents, but few lenders reported above-market value rents compared to 2018,” the report said.

Nearly half of lenders said there was an increase in farmer retirements in 2019 and nearly two-thirds said they look for that pace to quicken in the next 12 months.

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