Pinched profits on the farm are causing concern for some ag lenders. Rising debt to asset ratios are one red flag bankers and economists watch. The debt to asset ratios are rising, but still not to the level of the 1980s.Farmer Mac says another factor lenders watch is delinquency rates. A large jump in delinquencies would signal trouble.
“We see it a little bit higher,” said Curt Covington, senior V.P. agricultural finance for Farmer Mac. “However, our delinquencies at Farmer Mac have been pretty stable, but from what we hear out in the market place, some delinquency trends are increasing. We haven't seen it in our portfolio yet."
Farmer Mac economist Jackson Takach said those steady rates can be attributed to farmers' strong financial management.
“I think a lot of producers were able to tighten the belt; producers were very agile and able to cut costs where they could - fuel costs, seed costs, irrigation costs - trying to limit and be smarter about applications for almost every input,” said Takach. “I also think the run-up in the ag economy from 2011 to 2014 was probably better than anyone really estimated or expected.”
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