The Kansas City Federal Reserve’s Ag Finance Update reports a rise in farm debt this past quarter. It is being driven by a higher demand for financing and a softening agricultural economy.

Non-real estate farm debt at commercial banks increased by about 10% in the second quarter of 2024. It grew by 15% at agricultural banks.

Real estate debt also grew, but at a slower pace — 2% overall and 6% at agricultural banks.

Despite increased borrowing, delinquency rates remain low. Only 1% of loans are past due. This is a slight increase from record lows last year.

Credit conditions are tightening, with a high loan-to-deposit ratio and reduced liquidity at agricultural banks. However, capital levels have improved. The USDA anticipates only a slight rise in bankruptcy rates following record lows in 2022 and 2023.

Read more on the increase in farm debt here.