The impact of COVID-19 on the agricultural community has leaked into farm financing. According to economists, the total amount of non-real estate farm loans has been limited. While the total non-real estate loan volumes grew 15 percent since last year, loan volumes were still less than the last three years, and the number of new loans declined.
What This Means for Ag Loans: Due to subdued volumes of operating loans, lending has slowed. While some larger loans were distributed (specifically to livestock farms), smaller loan numbers offset the fewer loans of greater sum.
Over the past two decades, loan volumes at the largest banks have trended upward, but the pace of growth has fallen below trend for the past four quarters. This could be due to the risk associated with farm investment or better government financial support.
While the pandemic has caused much financial uncertainty for the ag industry, market analysts are hopeful that conditions for some agricultural commodities could improve by the end of the year.