The Latest Ag Bank Report from the KC Fed

The Kansas City Federal Reserve releases various reports each year on Ag Banking trends. The latest report was released on January 12, 2022.

Here are some interesting trends from the report:

• The average number of loans to farmers went down by about 30% in 2020 while the size of the loan actually went up by about 30%. However, in 2021, the number of loans went up by about 10% but the size of loans went down by about 25%. This is likely due to the amount of stimulus provided by Congress to the Ag sector plus good crop realization for the 2020 crop that was mostly sold in 2021.
• Total loan volume has dropped from about $100 billion to around $70 billion over the last year.
• In the 4th quarter of 2021, small farmers increased the number of loans by about 35% but large farms dropped their volume by about 5% and both sets of farmers showed much lower size of loans.
• On the operating and equipment side, the only material increase in total loan volume was equipment financing. This is very understandable with the large increase in equipment costs.

None of these trends are that surprising. It is likely that this trend will continue into 2022 but if interest rates do rise, the trend is likely to slow. We shall see.