In­ter­est rates on the rise

Successful Farming - - Q A THE SUCCESSFUL INTERVIEW -

Ag bankers are slowly rais­ing the in­ter­est rate on loans to farm­ers and ranch­ers, with the largest in­creases seen on op­er­at­ing loans, says the Fed­eral Re­serve’s quar­terly re­port on agri­cul­tural fi­nances. The im­pact of higher rates on pro­duc­tion costs is rel­a­tively small, equal to less than 1 bushel an acre for a Mid­west­ern corn farm. “Ad­di­tional in­creases in rates could put more pres­sure on some farm op­er­a­tions,” said the re­port, but the delin­quency rate on farm loans re­mains low.

Lenders charged an av­er­age rate of 4.9% on op­er­at­ing loans this spring, a no­table in­crease from 3.5% dur­ing the fi­nal quar­ter of 2015, when rates touched his­tor­i­cal lows. Rates on other types of loans are ris­ing at a slower pace.

“The in­crease in rates on op­er­at­ing loans, how­ever, is more no­table be­cause these loans ac­count for about 60% of the vol­ume of non-real es­tate loans at com­mer­cial banks,”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.