Money is available for qualified agricultural borrowers, but loan requirements are increasing even as loan demand declines.

“Overall loan demand has pulled back compared to last year. In particular, demand for feeder-cattle and farm machinery loans have declined,” says Laila Assanie, associate economist for the Federal Reserve Bank of Dallas. “Some respondents cited the ongoing dry spell and high feed costs in the District as factors impacting loan demand. Farm real estate loan demand has fallen as well, as land sales have slowed and land prices are beginning to flatten out.”

That’s based upon the most recent quarterly survey to assess credit condition in the 11th Federal Reserve District (Texas, southern New Mexico and north Louisiana).

“Fund availability is steady but collateral requirements have tightened up at some banks. A higher percentage of bankers reported waning loan repayment rates and rising requests for loan renewals and extensions compared with the previous quarter,” Assanie says.

Further north the Federal Reserve Bank of Kansas City (FRB-KC) also reports that for the first quarter of 2009 declining farm incomes have slowed capital spending and reduced demand for non-real estate loans, despite reduced interest rates. That’s based upon the most recent quarterly survey to assess credit condition in the 10th Federal Reserve District (Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri).

“Collateral requirements edged up and the rate of loan repayment fell for the second straight quarter,” say analysts with FRB-KC. “In addition, loan referrals to non-bank credit agencies rose as a consequence of drought conditions in wheat-growing areas of the district. In general, survey respondents felt that agricultural credit conditions could weaken further.”