Kansas Community Banks Brace for a Tougher Farm Lending Year
With commodity prices soft and input costs high, community bankers say agricultural borrowers face their most challenging year in some time.
Community bankers across rural Kansas are preparing for a tougher year in farm lending, as a combination of soft commodity prices and stubbornly high input costs squeezes the margins of their agricultural borrowers.
Bankers say most Kansas farm operations entered the year with reasonably strong balance sheets after several better seasons, providing a cushion. But renewal season conversations have grown more cautious, with lenders scrutinizing cash-flow projections and, in some cases, restructuring debt.
"Our job is to help good operators get through a bad stretch, not to pull the rug out," a banker in central Kansas said. Land values, which have remained high, continue to underpin farm credit even as income tightens.
Economists at the state's agricultural universities said the outlook hinges heavily on weather and on export demand for wheat and beef.
