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Whither the Future of Agricultural Lending?

Given the current state of banking, Fed interest rate policies, macroeconomic considerations and evolving FinTech innovations, it’s worth weighing the future of agricultural lending.

Per the USDA's 2022 data, given the total "Value of agricultural sector production" of $596B, there was a total "Farm sector debt" listing of $496.1B, of which farm real estate-related commercial bank lending constituted $107B, and farm non-real estate-related commercial bank lending constituted $67.8B. That's $175B of commercial farm bank lending in 2022, which constituted only 35% of the full sector debt.

Assuming further banking consolidation (resulting from interest rate hikes, a commercial real estate correction, sought middle-market mergers, etc.), and constrained lending activity, could that percentage drop? If so, would Farm Credit Service, FSA, SBA, insurance and other non-commercial financing routes necessarily fill in the gaps? Ambitious considerations of the future combined impacts of central bank digital currencies and Modern Monetary Theory for more inclusive public lending should yield welcomed postulates.


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