Ahead of the Fed — Farm Level Interest Rates

By Brent Gloy

At the end of 2015 many expected that the Federal Reserve might raise interest rates several times in 2016.  This was not an unreasonable guess as the December 2015 economic projections of the members of the FOMC suggested that most thought increases in the targeted Federal Funds were likely.

As it turned out, there were no additional increases in the target through November, setting up the December meeting as the last likely opportunity for a 2016 increase.  While we discussed the potential for farm level impacts of an increase back in 2015, we thought now would be a good time to take another look at farm level interest rates and begin to think through some of the implications of a potential interest rate increase. Continue reading

Plowing into Farm Interest Rate Data

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by David A. Widmar

Interest rates have been a popular subject in the past few years. After years of record-low interest rates, the U.S. Federal Reserve has hinted at a policy trend of increasing rates for more than a year. Other than a small, single rate increase late in 2015, rates have mostly remained in a holding pattern. In contrast to the U.S., several other counties have lowered interest rates to negative levels in hopes of spurring their economies.

At the farm-level, interest rates have several implications. Interest rates impact farm expenses and are a key fundamental driver of farmland values. Given declining net farm income and tight margins, credit worthiness is also a consideration in agriculture today. All this led us to digging into the Kansas City Federal Reserve Bank’s data on farm loans and interest rates. Specifically, this week’s post look at the distribution of farm loan interest rates. Continue reading