JANUARY / FEBRUARY 2021 %KVMGYPXYVEP 'VIHMX Outlook 2021 &VEH] &VI[IV 4L ( Assistant Professor, Agricultural Economics Purdue University brewer94@purdue.edu 8SHH , /YIXLI 4L ( Associate Professor, Schrader Chair of Farmland Economics Purdue University tkuethe@purdue.edu AG BANKING Despite an otherwise tumultuous 2020, the agricultural credit markets continued many prior trends. Specifically, interest rates, loan demand and farm loan delinquencies continued to decrease through 2020. These are positive signs for the agricultural credit market, for lenders and farmers alike. Although under pressure from both trade disruptions and the COVID-19 pandemic, government support payments to the agricultural sector bolstered farm cash flows. This support helped farmers seeking to lower loan balances and to repay a higher percentage of existing lines of credit. This article examines the trends in three key parts of the agricultural credit markets: interest rates, the demand for loans and nonperforming loans. We examine data obtained from the two Federal Reserve banks that serve Indiana. Sixty-eight counties in northern and central Indiana are part of the Federal Reserve Bank of Chicago region, and the remaining 24 counties in southern Indiana are part of the Federal Reserve Bank of St. Louis. Both Federal Reserve banks conduct quarterly surveys of agricultural bankers in their regions. The surveys address important issues in farmland and agricultural credit markets. It is important to note that both Federal Reserve regions cover large areas with diverse agricultural sectors, thus local conditions may deviate from broader regional trends. At the time of this writing, data for the St. Louis Federal Reserve district were available through the second quarter of 2020 through the Federal Reserve Bank of Kansas City’s Agricultural Finance Updates, and data for the Chicago Federal Reserve district were available through the third quarter of 2020 through the bank’s AgLetter publication. Interest rates. In 2020, interest rates continued the downward trend that started in 2019. Figure 1 plots the average interest rate on farm operating loans since the first quarter of 2015 for both Chicago and St. Louis Fed
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