Operating loans for farmers over $1 million surged during summer. The Kansas City Federal Reserve Bank said this marked the first time in two decades that large loans outpaced smaller ones.

Small and mid-sized lenders primarily fueled this growth, resulting in a more than 40% increase in new operating loan volume compared to the previous year.

The farm economy faced pressure from declining crop prices and persistently high production costs. This led to rising farm operating debt. In contrast, lending activity for other types of farm loans weakened. Strong cattle market prospects provided some sector resilience.

Elevated interest rates prompted a shift towards shorter-term loans. The average duration for non-real-estate loans decreased by five months from the prior quarter.

Read more on the growth of farm operating loans here.