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After years of farm income falling and the U.S./China trade war now taking its toll on the sector, Wall Street banks look as though they are giving up on lending to farmers, according to Reuters.
Meanwhile, total U.S. farm debt is slated to rise to $427 billion this year, up from an inflation adjusted $317 billion just 10 years ago. The debt is reaching levels not seen since the 1980's farm crisis.
Loan - Portfolios - Nation - Banks - Peak
Agricultural loan portfolios of the nation's top 30 banks was lower by $3.9 billion, to $18.3 billion between their peak in December 2015 and March 2019. This is a 17.5% fall.
An analysis performed by Reuters identified the banks by their quarterly filings of loan performance with the FDIC and grouped banks that were owned by the same holding company.
Slide - Farm - Lending - Cash - Flow
The slide in farm lending is happening as cash flow worries surface for farmers. We've highlighted numerous instances of farmers under pressure due to the U.S./China trade war and poor conditions, like this report from early June and this report on farmer bankruptcies from May.
Sales of products like soybeans have fallen significantly since China and Mexico imposed tariffs in retaliation to U.S. duties on their goods. The trade war losses exacerbated an already strained sector, under pressure from "years over global oversupply and low commodity prices."
Chapter - Bankruptcy - Filings - Farmers - Filings
Chapter 12 bankruptcy filings for small farmers were up from 361 filings in 2014 to 498 in 2018.
Minneapolis-St. Paul area bankruptcy attorney Barbara May said:
Phone - Farmers - Banks - Loans
“My phone is ringing constantly. It’s all farmers. Their banks are calling in the loans and cutting them off.”
At the same time, surveys are showing that demand for farm credit is growing. The demand...
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