Ag bankers say farmers are more profitable in 2022
The nation’s agricultural lenders say farm profitability is up this year but they expect financial conditions to deteriorate in 2023
Farmer Mac chief economist Jackson Takich tells Brownfield with last year’s government programs and the current commodity prices, ag bankers are confirming that more farmers are showing a 2022 profit. “We saw a big uptick in the profitability level of farmers, so we have to question what percentage of your customers are going to be profitable this year, and on average, the response was 82%.”
And, Takich says it’s not just the commodity prices that are giving ag lenders a positive outlook. “You see that sentiment popping through. You see land values up. You see rents starting to creep up, and so all of that leads to a fairly positive read of the current sentiment from ag lenders.”
Takich says ag lenders are concerned about the higher cost of inputs, knowing farmers need a way to pay for them and it will impact next year’s farm profitability. “You know, instead of 82% profitable, they’re expecting something like 70% of their customers to be profitable in 2023.”
Takach says farmers are watching their expenses, but when land becomes available, they’re still buying what they can even with higher interest rates. He says many are paying more money down and financing less of the purchase.
Farmer Mac and the American Bankers Association recently released their 2022 Ag Bankers Survey.