ABA Survey: Farm Profitability Remains Down but Fewer Lenders Report Declines

Farm profitability continued to decline in the first half of 2017, according to the latest agricultural lenders survey conducted by the American Bankers Association and Farmer Mac. While the overwhelming majority of ag lenders — 82 percent — reported declines in profitability, that figure was down seven points from six months before. The approval rate for ag loans was 84 percent.

“We were encouraged to see that lenders remain ready to assist farmers and fulfill their credit needs despite the drag in the agricultural economy,” said Brittany Kleinpaste, director of economic policy and research at ABA. “Overall, the data showed that agricultural lenders are a little more optimistic about what’s ahead for their customers than they were in December of 2016.”

Just over half of the lenders surveyed reported an increase in demand for agricultural operating loans, and 53 percent said they expect that trend to continue over the next six months. Lenders were also more confident in stable land values than in the previous survey.

Commodity prices continued to be a top concern among 93 percent of ag lenders, particularly grain and dairy, the survey found. In addition, 87 percent said they were concerned about liquidity, 85 percent were concerned about farm income and 77 percent were concerned about farm leverage.