Farm Progress America, Nov. 6, 2024

Mike Pearson takes a look at the uptick in borrowing by farmers across the country.

The Kansas City Federal Reserve published their ag finance update recently.

It revealed an uptick in borrowing by farmers-- mainly operating loans.

According to the survey, the volume of operations loans increased by 40 percent .

Notably those loans for over $1 million has surpassed the loans for under a $1 million.

This surge in borrowing is led by small and mid-size lenders. This marks a reversal from the post pandemic period.

Analysts say several reasons are contributing to the trend:

Weak crop margins coupled with weak crop prices and high production costs are forcing farmers to rely on operating loans to cover costs.

Interest rates are remaining at 8 percent in the third quarter. Interest rates are a deterrent to loans being paid off by the default rate is still lower than it was in 2014.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Mike Pearson, farm broadcaster and host of This Week in Agribusiness .