Lending Concerns: How are ag bankers preparing for next year?

After the Fed left rates unchanged this week, the markets are now banking even more on rate cuts in 2024 and 2025. Ag lenders say the interest rate volatility is their top concern as it has touched nearly every aspect of agriculture.

This year’s ag lender survey shows lender competition and credit quality were runners-up for top industry issues. Farmer Mac helped with the survey and says on the other hand, liquidity, farm income, and inflationary pressures were top of mind for ag producers. Lenders are preparing for farm income to shrink over the next year, with 70 percent of them expecting an overall decline in farm profitability.

Jerome Powell has announced the Fed will not be raising interest rates this month, which marks the third straight meeting with no rate hikes. He notes inflation has eased over the last year but says it still remains elevated. Powell says the Fed will later decide any additional steps they may need to take in order to get inflation under control.