Minneapolis Fed: Higher rates affect least profitable ag producers most

A recent article from the Federal Reserve Bank of Minneapolis explains how higher interest rates affect the farm sector.

Details: The article from Senior Agricultural Coordinator Tait Berg notes that in most years, the least profitable producers spend up to three times as much on interest expenses per crop acre farmed than the most profitable producers. It also says producers should prepare for elevated interest rates by incorporating higher interest expenses into cash-flow projections regardless of profitability and debt levels.

ACRE Act: ICBA strongly supports legislation to lower interest expenses for ag real estate mortgages by making interest income on farm real estate and rural mortgage loans tax-exempt. The Access to Credit for our Rural Economy (ACRE) Act (H.R. 3139/S. 2371)—which community bankers can urge their members of Congress to co-sponsor—would provide relief for loans secured by agricultural real estate and by rural single-family homes that are the borrower's principal residence.

Voter Support: ICBA recently released polling conducted by Morning Consult showing strong bipartisan support for the ACRE Act, with 70% of U.S. voters saying that tax relief to lending institutions in rural communities would help preserve family farms if these benefits are passed along to borrowers.


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