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“As rates tick up, growth in operating loans boosts farm lending.”
This was the title of an article co-written by Nathan Kauffman and Ty Kreitman, vice president and assistant economist of the Kansas City branch of the Federal Reserve Bank. respectively. It can be read in its entirety online.
Increases in operating loan volume may be likened to a “shot across the bow” warning us of an economic crisis looming on the horizon.
Additional clues either add support to the direction and nature of the crisis, or they may indicate the road ahead may not be as bad as it seems. Consider these numbers:
• Total non-real estate farm loans are up nearly 8% over one year ago.
• Total non-real estate farm loans have risen for seven consecutive quarters, with an average growth rate in 2018 of about 12%.
• Non-real estate farm loan volumes at the largest agricultural banks with portfolios of more than $25 million were up about 16% from the fourth quarter of 2017.