Farm loan delinquency rates have been creeping higher since 2014 when the farm economic struggles began. According to Kansas City Federal Reserve Bank farm loan performance data, the delinquency rate in the fourth quarter of 2019 for non-real estate loans was 2.12 percent, up from 1.77 percent for the same quarter the prior year. But while the increase is concerning, it’s important to put the recent uptick in context.
David Widmar, in the blog agricultural economic insights, recently examined delinquency rates for both non-real estate loans and real estate loans beginning in 1987. The data comes from the Kansas City Federal Reserve Bank’s Agricultural Finance Databook. Widmar found that between 1987-2019, delinquency rates for non-real estate loans averaged 2.25 percent. So, the most recent rate (2.12 percent), while higher than 2014 (0.72 percent), is still below the 30-year average. The same holds true for farm real estate loans. The current rate, 2.20 percent is higher compared to recent years, but is still below the 30-year average.
Farm loan delinquency rates are higher compared to recent years. The silver lining is delinquency rates continue to be below average delinquency rates for the past 30 years. To see Widmar’s blog, go to: https://aei.ag/2020/07/20/farm-loan-delinquency-rates-continue-higher/
Figure 2. Percentage of Delinquent Non-Real Estate Farm Loans
Source: Farm Loan Delinquency Rates Continue Higher, David Widmar, agricultural economic insights, July 20, 2020