A joint survey by the American Bankers Association and Farmer Mac revealed that agricultural lenders anticipate a broad pullback in farm profitability for 2024. Only 58% of borrowers are expected to remain profitable, a notable decrease from 78% in 2023.
This decline is attributed to lower export demand for U.S. agricultural goods and a rebound in global inventories, which have exerted downward pressure on global commodity prices and U.S. farm incomes. Lenders expressed increased concern about credit quality and agricultural loan deterioration.
In response to the challenging environment, lenders expect to tighten underwriting standards and loan terms for agricultural credit over the next 12 months. This outlook suggests potential headwinds for Farmer Mac's agricultural finance segment, impacting future loan demand and credit risk management.
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