The Kansas City Federal Reserve Bank issued a report on the farm economy that said farm lending remains “brisk,” but agricultural credit conditions have “deteriorated” as repayment rates have gone down. The report also says that banks are increasingly using real estate as collateral and raising interest rates. The report says farmland values have remained relatively strong, but a poor outlook for cash flow could continue to pressure a large share of farm borrowers, particularly those who are highly leveraged. National Farmers Union President Roger Johnson said the Federal Reserve’s assessment of farm credit conditions, and the signs of deterioration, have NFU concerned about hard times ahead.
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