Ag Lenders Slowly Raising Interest Rates 11 Jul 18

(Learfield News Service)  A recent report by the Federal Reserve shows ag bankers are slowly raising interest rates on operating loans to farmers.

Lenders charged an average rate of nearly five-percent this spring, up from 3.5 percent during the final quarter of 2015 when rates were at historical lows.

University of Minnesota Extension ag business management instructor David Bau says a lot of farmers borrow their input costs for the year so that interest rate will tick up a little bit and increase their costs for borrowing. So that will add a baseline expense they didn’t have before and there’s less money to go around this year (compared to) last year.

Bau says for a corn farmer borrowing $500 dollars to cover input costs for the upcoming growing season, estimates the one-and-a-half percent rate hike equals a per-acre increase of nearly $6 dollars.