Farm Loans Outstanding at Commercial Banks

Farm debt at commercial banks contracted in the second quarter of 2020 following a recent trend of slower agricultural lending activity. The 1% decrease in total outstanding loans was driven by a drop in both farm real estate and production loans. Farmland loans declined less than 1%, but it was the first decrease during any quarter in more than 35 years. Non-real estate loans declined by more than 2%, marking the fourth consecutive quarter of contraction.

Non-Performing Farm Loans at Commercial Banks

Alongside ongoing weaknesses in the agricultural economy and additional headwinds for many producers resulting from the pandemic, the share of non-performing agricultural loans continued to trend higher. Delinquency rates on farm loans remained manageable, but on a seasonally adjusted basis, have increased both annually and quarterly in every reporting period since the end of 2015. Compared to the second quarter of 2015, the volume of total non-performing farm loans was nearly 120% higher, while total debt outstanding at commercial banks grew by only 11%.

Authors

Cortney Cowley

Economist

Cortney Cowley is an economist in the Regional Affairs Department of the Federal Reserve Bank of Kansas City. Her current research focuses on agricultural finance, commodity mark…

Ty Kreitman

Assistant Economist

Ty Kreitman is an assistant economist in the Regional Affairs Department at the Omaha Branch of the Federal Reserve Bank of Kansas City. In this role, he primarily supports the F…