Farmers are still feeling the pressure of a lagging farm economy. A joint survey from the American Bankers Association and the Federal Ag Mortgage Corporation confirms the pressure.
Nearly 90 percent of ag lenders report an overall decline in farm profitability over the last year. 84 percent indicate there are higher levels of operating leverage as a result. The survey of 350 ag lenders showed that 60 percent of all borrowers are profitable, but only 54 percent of those same borrowers are expected to stay profitable through the rest of 2017.
The degree of pessimism varies by location. Lenders in the South and West said a majority of their customers were profitable in 2016. Corn Belt lenders expect only 55 percent of their customers to remain in the black through 2017. Things are tougher in the Plains states. Lenders in those locations expect only 45 percent of their customers to remain profitable through the rest of this year.
A Farmer Mac analyst said the grains, cattle, and dairy sectors have been hit hardest as market prices remain at the low end of the cycle. Lenders that work primarily with poultry, vegetable, fruit, and nut farmers are more optimistic about the future.