Banks say Nebraska farmers struggle to repay loans

Farm Forum

OMAHA, Neb. (AP) — Economists from the Federal Reserve Bank of Kansas City say more borrowers raising livestock and row crops in Nebraska and surrounding states are struggling to repay loans as commodity prices stay low.

Bankers surveyed for the regional Fed’s latest report on agricultural credit conditions indicated continued problems in the second quarter, the Omaha World-Herald reported.

More lenders reported a growth in the volume of borrowers with repayment problems as well as a higher number of denied loan applications compared to last year.

Nebraska bankers said they haven’t denied more loans to borrowers, but that financial situations are definitely getting tighter.

“It’s not like there’s a wholesale disaster out there, but it is concerning this is the second year our borrowers aren’t profitable,” said Todd Adams, chief executive of Adams Bank & Trust in Ogallala. “It’s hard to find any glimmers of hope that the situation will be any better next year.”

Adams said that’s partially because a strong crop of corn and soybeans is likely to weigh down prices, just like this year. A large harvest could help offset some losses, but according to Adams, it’ll be difficult to find profitability in a market that’s already heavy on supply.

The Fed’s Nathan Kauffman and Matt Clark found that the steep drop in prices shows continued demand for operating loans as well as declines in broader farm income.

On Aug. 10, Omaha-based farm-financing cooperative Farm Credit Services of America reported a 9 percent decline in net income through the first six months of the year. The cooperative attributed the decline mostly to farmers setting aside money to cover potential losses on soured loans.

The Fed survey showed that the effects on the broader economy are deeper this year than in previous years as businesses tied to the agriculture industry have shed jobs since the commodities dip.