WASHINGTON, D.C. (RFD-TV) — Farmers are borrowing more money as tighter profit margins put additional pressure on farm budgets.
Chad Gent with Farm Credit Services of America says borrowing also increased during the previous agricultural downturn, but higher interest rates are making conditions more difficult this time.
“When we see a certain industry become more profitable, the average utilization of our operating lines, our revolving lines, goes down in the highest profit years. Then, as we have moved from 2023 to 2026, we’ve progressively seen the percentage use of those operating loans increase year over year. So it is a very relatable and obvious outcome of tighter margins as we’re seeing those balances increase. The challenge that we have today also, as everyone’s very familiar with, is interest rates are higher. When we were in the downturn 10 years ago, interest rates were lower on those operating loans.”
Gent says carefully managing every expense will be critical for farmers facing tighter budgets.
