Liquidity and Net Income Key Concerns For Lenders

OKLAHOMA CITY, OK – Liquidity has become the primary concern among agricultural lenders for producer customers, followed closely by farm income levels, according to the 2023 Agricultural Lender Survey by ABA and Farmer Mac released during last week’s ABA Agricultural Bankers Conference.

The survey also found that rising input costs, previously ranked as the top concern in 2021 and 2022, dropped to the third highest this year. Recession risk remained a middling concern for lenders despite worries about an economic slowdown over the coming year.

According to the survey, interest rate volatility remained the top perceived concern facing lending institutions in 2023. Lender competition and credit quality were the second and third most significant overall concerns.

At the same time, ag lenders estimate that more than three-quarters of their borrowers will remain profitable in 2023, and two-thirds will remain profitable through 2024.

Lenders also expect farm income compression over the next 12 months, with 70 percent projecting a decline in farm profitability.
(SOURCE: American Bankers Association)