Agricultural lenders were on Capitol Hill this week to talk to legislators about the current credit conditions in farm country.
An Agri-Pulse report says the lenders appeared before the House Agricultural Subcommittee on Commodity Exchanges, Energy, and Credit.
Steve Handke of the First Option Bank in Kansas, says agricultural portfolios are remaining stable but showing signs of deterioration. “Many bankers are concerned about low commodity prices and their negative impact,” he said during testimony.
“While credit is plentiful, competition for loans is intense as interest rates remain near historic lows. All that is beneficial to farmers.”
However, what’s not beneficial is the fact that $22.4 billion of the total farm income in 2019 came from government payments, which is not sustainable income.
Shan Hanes of Heartland Tri-State Bank in Kansas told legislators that net farm income dropped an average of 85 percent in just six years.
“I dare say, many of us wouldn’t survive if our paychecks were cut 85 percent,” he said during testimony.
Other bankers testified that working capital levels, the difference between current assets and current liabilities, have declined sharply since 2013.
A North Dakota banker says it’s the cushion against tough times that just isn’t there anymore.