Federal Reserve: Ag Credit Standards Tighten

February 19, 2009 06:00 PM

Pro Farmer Editors


According to the Federal Reserve Bank of Kansas City's "The Main Street Economist" newsletter, agricultural credit standards are tightening. The publication states: "Amid economic weakness and a financial crisis, commercial banks have tightened credit standards for various types of loans. While agricultural borrowers may be concerned about credit availability, agricultural lenders are equally concerned about the creditworthiness of agricultural borrowers as the farm economy weakens."

Jason Henderson, Vice President and Omaha Branch Executive, says agricultural banks are outperforming other commercial banks -- but they still saw their profits decline. "Despite questions regarding credit availability, commercial banks are extending credit to agricultural borrowers at lower interest rates. The soft erosion in agricultural loan quality, however, has led agricultural lenders to tighten credit standards and shift more financial risk to borrowers," he writes.

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