A survey of agricultural lenders across the United States conducted by Kansas State University indicates that lenders expect loan interest rates to rise, non-performing loans to increase slightly and farmland values to fall in the longer term.
The purpose of the survey, which is conducted twice per year, is to provide farmers an idea of the current and future state of agricultural credit conditions. In response to volatile commodity markets, the survey was created in spring 2013 to track and forecast credit condition developments.
According to the survey, in the past three months, loan interest rates increased for farm real estate and decreased slightly for intermediate and operating loans. Respondents indicated that interest rates will increase in the short and long term for all three types of loans.
Survey respondents were asked about non-performing loans in both the crop and livestock sectors. Non-performing loans for corn, soybeans, wheat and nursery crops decreased in the past three months, but lenders indicated an expectation that non-performing rates in these sectors will increase in the long-term. With regard to non-performing loans for the beef, dairy, hog and poultry sectors, respondents indicated an expectation for a slight increase in non-performing loans.
New to the fall 2013 survey was a question about land prices. Agricultural lenders responding to the survey indicated that land price increases will slow in the short term and will start decreasing in the long term.
For more information about the outlook for agricultural credit conditions and commentary on areas of concern within agriculture, go to the K-State Agricultural Lender Survey.