Ag lending slowed alongside the initial effects of the pandemic and there is a more pessimistic outlook for agricultural economic conditions, the Kansas City Fed said in its latest Agricultural Finance Databook.
The volume of total non-real estate farm loans continued into a yearlong trend of declines during the second quarter of 2020.
The slowdown in lending was generally consistent across all types of loans, KC Fed analysts said. Delinquency rates on farm loans increased steadily through the first quarter and agricultural credit conditions remained weak.
The report notes that emergency government lending programs, the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) program, “likely supplemented the financing needs of some producers while direct aid payments may help offset declines in farm revenues in 2020.”
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