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K-State Agricultural Lender Survey: Start of 2014 Shows Expected Increases for Future Ag Lending

03 June 2014

US - Agricultural lenders indicated less optimism early this year than they did near the end of last year, according to the results of the March 2014 K-State Agricultural Lender Survey. Lenders were not as optimistic as they were in the fall 2013 survey, although one area of continued optimism is farm loan volume.

Results show that respondents expected an increase in interest rates, farm loan volume and non-performing loans, and land values are expected to decrease.

Allen Featherstone, interim department head and professor of agricultural economics at Kansas State University, said the survey gives farmers an idea of the current and future state of agricultural credit conditions. As with the survey conducted in the fall of 2013, the purpose of the spring 2014 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 between the spring and fall survey responses, Featherstone said.

  • Interest rates are expected to increase in the short term and long term, while the spread over cost of funds is expected to increase in the long term. Loan interest rates for farm real estate rose slightly, but decreased slightly for operating loans.
  • Land prices continued to increase in the last three months, although future expectations have weakened since the last survey. The current survey shows expectation for the short and long run suggest more sentiment that land values will fall than expressed in the fall 2013 survey. More respondents expect land prices to decrease during the next year than those who expect it to increase.
  • Although agricultural lenders indicated that they were not as optimistic as they were in the fall of 2013, one area where they were optimistic was farm loan volume. Lenders indicated that they expect farm loan volume to increase for all categories. The sentiment that non-performing loans will rise also increased as respondents indicated that they expect non-performing loans to increase in the short and long 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 .

The 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 of academic programs, for the College of Agriculture.

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