Prolonged Need for Lending Pressures Farm Finances

The pace of agricultural lending in the second quarter remained strong. Respondents to the Survey of Terms and Bank Lending to Farmers indicated the total number of non-real estate loans made to farmers in the second quarter increased 6 percent from a year ago (Chart 1). Moreover, the number of non-real estate loans larger than $100,000 made to farmers climbed 11 percent, continuing the trend of recent years. Reduced cash flow also has led to extended maturities for many loan categories to help reduce annual debt payments. Loans used to finance machinery and equipment were extended to an average of 46 months in the second quarter from an average of 28 from 2005 to 2014 (Chart 4). Maturities on loans used to finance livestock operations, excluding the purchase of feeder livestock, increased to a record 20 months. In fact, since 2005, maturities on each of the loan types tracked in the survey has increased, but most significantly in the machinery category.