The American Bankers Association (ABA) and Farmer Mac have released the results of their 2016-17 Winter Agricultural Lenders Survey. The survey combines input from over 350 loan officers, managers and executives across the country, including banks ranging in asset sizes from under $50 Million to greater than $5 Billion. The survey analysis breaks down results by general agricultural economic insights and factors affecting lending institutions. The analysis concludes with a broader description of the respondent demographics.
Key takeaways from the survey include:
- Nearly 90 percent of survey respondents report an overall decline in farm profitability in the last 12 months and 84 percent indicate higher levels of operating leverage as a result.
- Lenders note that commodity prices and availability of working capital are top concerns they believe their borrowers face.
- On average, survey respondents indicate that nearly 60 percent of their current agricultural borrowers are profitable and expect that 54 percent will remain profitable through 2017.
- Forty-seven percent of respondents report lower land values in 2016, and 56 percent of lenders expect further declines in the first half of 2017.
- Most lenders (54 percent) expect a decline in land values of between 0 and 10 percent in the next year. Nearly an additional 25 percent report an expected decline of more than 10 percent in the coming year.
- The average lender reports that 44 percent of average quality land and 33 percent of cash rents are above fair market value in their area.
- Regulation, compliance and competition are lenders’ top concerns facing their own institutions.
- The majority of lenders (66 percent) expect an increase in agricultural operating loan demand in the next six months, while most lenders (51 percent) expect demand for agricultural real estate to remain unchanged.
- Many responding institutions (42 percent) have between one and three dedicated agricultural lenders on staff with an average of 19-20 years of experience.
- Respondents expect nearly a third of agricultural lending staff to turnover in the next five years.
The full survey results are available here.