August 29, 2023
Mike Pearson examines how interest rates are impacting the agriculture sector.
In 2021, 90 percent of operating loans were under 5 percent. This year, it's north of 8 percent.
Inflation increased during COVID in 2021 and the Russia-Ukraine conflict.
So, the federal government started to raise interest rates in an effort to fight inflation.
Currently, the federal rate is 5 1/4 percent which makes an interest rate around the 8 percent mark.
This makes the pressure on farm operators increase because of the high interest rates and a high cost of production.
The interest rates bumps have cooled inflation enough which means interest rates could continue to go up until inflation rates hits 2 percent.
Farmers should move to refinance debt because interest rates aren't going anywhere anytime soon.
Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Mike Pearson, a farm broadcaster and host of This Week in Agribusiness.
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