Despite the global economic slowdown in 2020 due to COVID-19, total agricultural lending by U.S. farm banks remained strong at $98.6 billion, decreasing by only 1.8% from the year before, according to the American Bankers Association’s annual Farm Bank Performance Report. The report attributed the change to a 6.7% decline in agricultural production loans. By contrast, outstanding loans secured by farmland increased 2.1% to $56.7 billion.
“American farm banks have remained healthy this past year and continued to play a critical role in supporting farmers and the broader US economy through the turbulence of 2020,” said ABA’s Chief Economist Sayee Srinivasan. “While the agricultural sector will continue to face challenges as the economy reopens and recovers from the coronavirus pandemic, the strong asset quality and capital levels of America’s farm banks will help ensure that they continue to provide support to rural communities.”
The Plains region’s 626 farm banks decreased their farm loans by 2.29% to $38 billion in 2020. Ag production loans fell 6.75% from the year before while farmland loans increased 2.27%.