Agricultural lending by U.S. farm banks increased 5.5% in 2021 to $99.6 billion, according to the American Bankers Association’s Farm Bank Performance Report. The change is based on a 7.5% increase in outstanding loans secured by farmland and a 2.9% increase in agricultural production loans.
The annual report examines the performance of the 1,553 banks specializing in agricultural lending. In 2021, farm banks provided access to Paycheck Protection Program funds, originating 538,154 PPP loans worth $14.6 billion, distributed by more than 7,500 branches in rural America. Farm banks continue to be a major source of credit to small farmers, holding more than $43.8 billion in small farm loans ($500,000 or less), including $9.9 billion in micro farm loans ($100,000 or less) at the end of 2021.
Ninety-eight percent of farm banks were profitable in 2021, with 73.2% reporting an increase in earnings. Farm banks also served as job creators, adding more than 1,600 jobs in 2021, a 2.1% increase, and employing 80,000 rural Americans. Farm banks have also built strong, high-quality capital reserves and are well-insulated from risks associated with the agricultural sector. Equity capital at farm banks increased 6.5% to $53.3 billion in 2021 while tier 1 capital increased by $4.5 billion to $46 billion.
At the end of 2021, all banks—not just farm banks—held $179 billion in farm and ranch loans. Small loans continue to make up almost half of banks’ farm and ranch lending, with $69 billion in small and micro farm and ranch loans at the end of 2021, including more than 737,000 microloans worth more than $16 billion.
