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Farm borrowing activity remained subdued in third quarter

Farm borrowing activity continued to run at a slower-than-normal pace in the third quarter of this year, according to a national survey of ag lenders.

Loans for operating expenses increased from last year but were less than the last three years and below the 20-year trend—and the number of new loans originated to farmers declined for nearly all loan types.

Kansas City Federal Reserve ag economist Cortney Cowley says government payments and programs probably reduced the need for financing for some farm borrowers.

“That could help boost revenues for some borrowers and make their demand for financing lower—or it could just be that the fundamentals for most of this year, including the third quarter, were relatively weak from a profitability standpoint,” she says.

Cowley says the situation has improved somewhat in October with expectations for tighter crop inventories and an uptick in prices. But she says the outlook for ag finance, like the general economy, is “highly uncertain” amid the ongoing pandemic.