The nation’s top ag lender provides an update on the rural economy during a House appropriations hearing.
The Farm Credit Administration provides 45 percent of the credit needs for American agriculture. Chairman Glen Smith told House lawmakers that the system reported solid financial results for 2020, including strong loan growth and higher earnings.
According to Smith, “The farm economy is in better shape today than it was a year ago thanks to robust U.S. exports, and strong crop prices since last fall, and continuing low-interest rates.”
Direct government payments accounted for just over $46 billion dollars of farm income in 2020, to provide relief from trade stress, natural disasters, and the pandemic, but Smith says that conditions are improving.
“We’ve seen some tremendous changes where the market has stepped in and replaced those government payments which from the start was only intended to be temporary,” Smith states.
Despite the optimism for 2021, he says that there are still areas of concern.
“Credit stress is likely to continue in certain agriculture sectors and geographical areas,” he adds. “The effect of changes in interest rates, trade, financial markets, and general economic conditions are areas of concern...”
Looking ahead, Smith says that Farm Credit is partnering with the USDA to provide better loan education and tools for young and beginning farmers, as well as socially disadvantaged farmers.
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