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From staff reports
Non-real estate agricultural loans have surged in the past year according to the Federal Reserve Bank of Kansas City. In addition, operating loans have also increased and have climbed to over $1 million. That is a 30% increase from this time last year.
That being said, lending levels remain below average when you factor inflation-adjusted basis into the equation. The number of loans has not increased, it is the amount of money being loaned that has. Federal Reserve Bank economists cite a rise in inputs and the Russia-Ukraine war has caused uncertainty in the market. Although commodity prices are higher, so are the costs of fertilizer and fuel.
“While higher crop prices are likely to support farm revenues, concerns about the cost and availability of agricultural inputs intensified and higher feed prices could also pressure profit margins for livestock producers. Higher prices for key farm inputs and broad inflation could also put upward pressure on credit needs moving forward,” according to Federal Reserve Bank staff economists, Nathan Kauffman and Ty Kreitman.