Agricultural Lenders Concerned About Farm Profitability in 2021

WASHINGTON, DC – The American Bankers Association (ABA) recently released the results of their Ag Lender Survey where lenders are expressing concern regarding compression in farm profitability this year and reduced expectations for profitability. On the topic of profitability, most lenders do not see it improving in the new year (2021) either. Agricultural lenders can provide a unique outlook on circumstances in the farm economy because farmers and farm businesses that use financing are routinely required to present financial updates to their loan officers, giving lenders a distinct opportunity to evaluate local farm economy conditions. Specifically, lenders continue to be most concerned about the liquidity, income, and leverage of producers. Uncertainty regarding tariffs and trade, the weather, and the impacts of the COVID-19 pandemic and resulting economic downturn is close behind. Lenders across all regions and sizes also remain concerned with credit quality and competition for loans in 2020.
(SOURCE: All Ag News)