Farm Finance Deterioration Eases Slightly

Federal Reserve Surveys of Agricultural Credit Conditions suggest that farm finance deterioration has eased slightly. The surveys, which began in Q2 2012, reported that the pace of decline in farm loan repayment rates and farm income slowed during the second quarter.

According to lenders participating in the surveys, the share of lenders reporting lower repayment rates than a year ago dropped from around 50% to about 30% in the Minneapolis and St. Louis Districts. Similarly, the share of lenders reporting lower farm income than a year ago decreased from around 90% to about 60% in these districts.

Despite this easing, credit standards continued to tighten steadily, with nearly 30% of lenders in the St. Louis District reporting higher collateral requirements for farm borrowers than a year ago.