The Kansas City Federal Reserve Bank reports a slowdown of farm lending in the first quarter of the year. Before the emergence of global economic developments related to COVID-19, growth in farm lending continued to show signs of slowing.
According to data collected in early February, agricultural lending activity showed further signs of slowing in the first quarter, despite an increase in the volume of operating loans. The total volume of non-real estate loans remained above the historical average, but were about ten percent lower than a year ago. Despite a decline in most types of lending, loans for operating expenses increased nearly ten percent.
The overall decline was driven by a drop of about 30 percent in both livestock loans and loans for miscellaneous purposes. The KC Fed says demand for farm loans may increase as economic disruptions associated with the COVID-19 pandemic could put additional pressure on farm finances.