70 Percent of Ag Bankers Are Increasing Collateral

November 18, 2016 12:35 PM

Midwestern ag bankers are continuing to share concerns about the state of the farm economy. The Rural Mainstreet Index dropped below growth neutral for 15 months in a row.

According to the report, 70 percent of bank CEOs indicated their bank increased collateral requirements because of the slumping farm economy.

In the next year, bankers expect loan default rates to be roughly 5 percent. Looking at 2016 balance sheets, Alan Hoskins of American Farm Mortgage said roughly 1 in 4 farmers are facing negative cash flows this year.

“If we see a repeat of 2016 in 2017, that number may change from 25 percent to somewhere in that 35 to 40 percent range,” said Hoskins.

The RMI said 1 in 5 livestock producers are expected to report negative cash flows in 2016. 

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