Agricultural loan demand increased in 2023, and agricultural lending by U.S. farm banks grew 6.7 percent to $110 billion. The American Bankers Association’s annual Farm Bank Performance Report credits elevated production costs, commodity price volatility, and a return to pre-COVID levels of direct government payments.
The ABA says farm banks continued to enjoy solid performance in 2023, with robust loan growth and historically low delinquency rates. “Moving forward, the agricultural sector will continue to face challenges due to monetary policy actions targeting persistent inflation in the U.S. and reduced federal support,” the ABA says in a news release.
Despite the challenges, farm banks maintained strong asset quality and consistent growth in high-quality capital and remain well-positioned to continue serving the needs of their customers and communities. The report also showed that farm banks are a major source of credit for small farmers. Last year, 98.1 percent of farm banks were profitable.
