Mike Pearson takes a look at interest rates and the impact on farm business.

August 29, 2023

Mike Pearson examines how interest rates are impacting the agriculture sector.

In 2021, 90 percent of operating loans were under 5 percent. This year, it's north of 8 percent.

Inflation increased during COVID in 2021 and the Russia-Ukraine conflict.

So, the federal government started to raise interest rates in an effort to fight inflation.

Currently, the federal rate is 5 1/4 percent which makes an interest rate around the 8 percent mark.

This makes the pressure on farm operators increase because of the high interest rates and a high cost of production.

The interest rates bumps have cooled inflation enough which means interest rates could continue to go up until inflation rates hits 2 percent.

Farmers should move to refinance debt because interest rates aren't going anywhere anytime soon.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Mike Pearson, a farm broadcaster and host of This Week in Agribusiness.

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