Agricultural lending by U.S. farm banks increased 8.1% in 2022 to $103.1 billion despite supply chain disruptions, volatility in commodity prices and geopolitical uncertainty, according to the American Bankers Association’s annual Farm Bank Performance Report released today. The report attributed the change to a 9.7% increase in outstanding loans secured by farmland and a 5.9% increase in agricultural production loans. It also found that farmland continues to provide a strong equity base for producers to tap as land values saw strong growth in 2022 after plateauing for several years.
“Farm banks enjoyed strong growth and performance in 2022, despite remaining disruptions from the COVID-19 pandemic and rising economic uncertainty,” said ABA Chief Economist Sayee Srinivasan. And while the agricultural sector will continue to face challenges in 2023 because of the current economic environment, “farm banks remain well-positioned to continue serving the needs of their customers and communities, with strong asset quality and healthy capital levels,” he said.
Farm banks are a major source of credit to small farmers—holding more than $43.8 billion in small farm loans, including $9.3 billion in micro farm loans at the end of 2022, according to the report. Farm banks also served as job creators, adding more than 800 jobs last year, a 1.1% increase, and employing more than 75,000 rural Americans.