Kansas City Fed: Farm Credit Conditions Expected to Soften

November 16, 2008 06:00 PM

Pro Farmer Editors

The Federal Reserve Bank of Kansas City says farm credit conditions remained healthy in the third quarter, but are expected to weaken in the coming months. In a recent survey of ag lenders, they reported tighter credit standards and reduced funds availability, while demand for farm loans remained strong.

The report states the index of funds available for ag loans declined in the third quarter, but remained slightly above year-ago levels. "Still, less than two percent of survey participants reported refusing a loan due to a shortage of funds and there was no change in the number of loans referred to correspondent banks of non-bank credit agencies," states the report. "Loan demand remained strong, however, some borrowers faced tighter credit standards as almost 20 percent of respondents raised collateral requirements. The rate of loan repayments and the number of loan renewals and extensions held steady."

Survey respondents anticipate additional tightening for credit standards, however farm loan demand is projected to rise.

Link to full report.


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