According to Bloomberg News, the Federal Reserve Bank of Kansas City recently reported that “farm finances deteriorated across a swash of agricultural states during the summer and early fall . . .” Specifically, farm income fell in the third quarter from a year ago in each of seven rural states covered by the K. C. Fed., while farmers’ dependence on federal assistance programs increased.
This situation is due, in part, according to Bloomberg, to:
• Extreme weather conditions
• The trade war
• Volatile crop and commodity prices and other factors.
Farm bankruptcies are the highest since 2011, having risen 24% from last year. Banks, other lenders and any providers of credit to agricultural enterprises would be wise to carefully monitor all credit renewals for the coming year, as well as the extensions of any new credit. It is also essential that farm creditors closely watch farmers’ compliance with loan and contract covenants, as well as any Uniform Commercial Code or other lien filings against their debtors.
This article was authored by Frank Schepers, partner at Lamson, Dugan & Murray, LLP