Demand for Larger Farm Operating Loans Bears Watching

he Federal Reserve Bank of Kansas City released it third quarter Ag Finance Databook last Friday and its headline read “Large Scale Financing Drives Ag Lending Activity Higher.” In summarizing its findings, the report said, “Large operating loans made by large agricultural banks led to a significant increase in farm lending in the third quarter of 2018. A sharp increase in the volume of loans exceeding $1 million was a primary contributor to the increase in non-real estate farm lending. In particular, a majority of the increase was supported by loans used to fund current operating expenses. The increase in the size of loans also sharply increased the share of agricultural lending at large banks while interest rates on farm loans continued to trend upward.”