Farm Debt Rises in Latest Quarter
The KC Federal Reserve released their latest Ag Finance Update and farm debt has risen, but delinquencies are low
Non-real estate farm debt grew about 10% from the same period last year. This is not surprising with the increase in farm input costs plus the reluctance by farmers to sell their crops, operating debt was expected to rise.
However, the amount of farm debt is still below the inflation adjusted trend and delinquencies are still very low.
Commerical Ag banks saw larger increases than the overall level at 6% for farm real estate loans and 15% for non-real estate loans.
Earnings and capital levels at farm banks continue to be healthy.
Over the last 15 years, the delinquency rate peaked at about 4% in 2011, dropped to a low of about 1.5% in 2015, started to rise to 2.5% in 2020 and now is about 1%.
Based on the report, the farm economy is still healthy and even though 2025 outlook is for lower income, farmers still should be in good financial shape.