K-State Team Analyzes Agricultural Lending Practices

Agricultural lenders indicated that 2013 credit conditions held, but they look for future conditions to soften, according to the results of the September 2013 K-State Agricultural Lender Survey. Respondents expected loan interest rates to rise, non-performing loans to increase slightly from their current low level and farmland value gains to slow and then dip in the longer term. 

Allen Featherstone, interim department head and professor of agricultural economics and program director of the Master in Agribusiness degree at Kansas State University, said this survey gives farmers an idea of the current and future state of agricultural credit conditions. As with the survey conducted in the spring of 2013, the purpose of the fall K-State Agricultural Lender Survey is to not only answer questions about the evolution of agricultural credit conditions, but also to provide a broader overview of all agricultural lenders.

There were noticeable differences among the spring and fall survey responses, Featherstone said.

•        Unlike the spring results, fall survey respondents expected interest rates to increase in the short term and long term for operating, real estate and intermediate loans.

•        Non-performing loans during the past three months for the crop sectors of corn, soybeans and wheat experienced a decrease; however, non-performing loans are expected to increase in the long term for these sectors. One reason for the increase in non-performing loans in the long run is that currently many lending institutions have few, if any, non-performing loans.

•        Responses to a new question for the fall survey indicated that land prices increased during the past three months. While this upward trend is expected to stay in the short term, respondents believe land prices will start decreasing in the longer term.

For more information about the outlook for agricultural credit conditions and commentary on areas of concern within agriculture, go to the K-State Agricultural Lender Survey, http://www.ageconomics.ksu.edu/p.aspx?tabid=705.

This survey was developed by K-State’s Department of Agricultural Economics’ Brady Brewer, doctoral candidate; Brian Briggeman, associate professor and director of the Arthur Capper Cooperative Center; Allen Featherstone; and Christine Wilson, professor and assistant dean, Academic Programs, for the College of Agriculture.







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