However, the majority do not expect higher loan charge-off rates in the coming year (65.8% and 74.7%, respectively). Survey respondents generally expect higher ag loan delinquency rates heading into 2020 for both production (51.6%) and real estate (39.5%). While demand for loans secured by farmland was flat over the last 12 months, a large share of lenders expect demand to increase in the next 12 months (46.5%). A similar sentiment was reported for loan demand over the next 12 months. Just over half of lenders reported that demand for agricultural production loans was flat during the last 12 months, but a significant share (45.3%) of lenders with assets between $50 million and $250 million reported increased demand. Nearly half of survey respondents reported receiving inquiries from their borrowers about financing hemp production (49.9%) and more than one-third of respondents reported an increase in requests for alternative energy project financing (36.8%). Roughly one-third of lenders noted an increase in ag technology investment in their areas in the last 12 months (32.0%), and a similar percentage expect the investment in ag technology to continue to increase in the coming year (33.4%).Īccording to the report, producers are also asking about alternative sources of income or cost mitigation. "However, America's farmers and ranchers are adapting to the new economic reality, looking for new sources of income and increased efficiencies through technology adoption." "The farm profitability picture remains tight in 2019, and ag lenders see that coming through in their customers' financials," said Farmer Mac's Chief Economist Jackson Takach.
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These figures are comparable to lenders' profitability expectations from the 20 surveys. Lenders expect that 56% of their borrowers will remain profitable through 2020.ĭairy, grains, and cattle were the sectors that concerned lenders the most, while lenders reported less concern for the swine, poultry, and vegetable sectors. On average, lenders reported that just over 57% of their agricultural borrowers were profitable in 2019 but 82.5% of respondents noted that profits were declining, which was consistent across all reporting regions. While uncertainty has risen, banks are well prepared to continue their support for the ag community through these challenging times." "Bankers know the cycles of agriculture very well and will continue to work side-by-side with their customers as they have done in the past.
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"Bankers are naturally concerned for their farmers and ranchers as the ag economy continues to regain its footing," said ABA's Chief Economist James Chessen.
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The report was released during ABA's Agricultural Bankers Conference, the nation's largest gathering of ag bankers, this week in Dallas. When it comes to their customers, the survey found that ag lenders are most concerned about producers' liquidity and farm income, but uncertainty around trade and weather edged up on the list since the 2018 survey. Source: American Bankers Assn news releaseĭallas, TX - As the farm economy continues to work through a prolonged downturn, credit quality and the deterioration of agricultural loans remains the top concern for ag lenders, according to the Fall 2019 Agricultural Lender Survey report produced jointly by the American Bankers Association and the Federal Agricultural Mortgage Corporation, more commonly known as Farmer Mac. ABA, FARMER MAC AG LENDER SURVEY REVEALS TOP ISSUES FOR 2020