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The Supply and Demand of Agricultural Loans
Credit plays a critical role in the agricultural sector, but many studies suggest that farmers are credit constrained. We examine the degree to which changes in non-real-estate agricultural loans at commercial banks are driven by changes in supply and demand, using information provided by agricultural lending surveys conducted by the Federal Reserve Banks of Chicago, Kansas City, and Minneapolis. Building on recent studies of loan officer opinion surveys, we estimate the changes in agricultural loan supply and demand using an unbalanced panel of 1,024 banks across 191 quarters ...
Increased Loan Demand and Higher Interest Rates May Benefit Ag Banks
Extreme weather, geopolitical conflicts, supply chain disruptions, and rising interest rates all directly affectU.S. agriculture, which may in turn affect banks that make agricultural loans. Demand for loans from agbanks could rise following events that reduce net farm income or increase banks’ ability to reprice loans,such as supply chain disruptions or higher interest rates. But competition with other banks and nonbankfinancial institutions may offset some of these benefits.
Commodity Prices Have Limited Influence on U.S. Food Inflation
Food prices increased at the fastest pace in more than two decades from July 2021 to July 2022. We show that this increase has not been driven by commodity prices but by an increase in consumer spending on food at home and increases in costs along the supply chain. Our results suggest that food inflation could ease if consumers shift more purchases back to food service establishments and if costs in food processing and marketing abate. Conversely, food inflation could remain high if broader measures of inflation persist.