Lending risks keep credit conditions tight for farms
U.S. commercial banks are keeping credit standards elevated for farmers wanting loans to grow crops and raise livestock this year after loan repayment worsened in 2009 and delinquency rates rose, the Kansas City Federal Reserve said.
The government's outlook for farm income to rebound in 2010 should improve farmers' access to credit as the year progresses, the Fed said. The exception will be big livestock operations burdened with heavy debt after a disastrous 2009.
"Those facing the most difficulty in getting credit are livestock producers, whose thin profit margins and high debt levels are likely to continue in 2010," economists Jason Henderson and Maria Akers said in Kansas City Fed's latest newsletter.
Even though ag banks outperformed other commercial banks during the long recession, they still tightened credit standards in 2009 as volatility in agricultural markets like grains and hogs jumped and farm profits fell.
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