Farm Interest Rates Highest Since ’07

Despite high commodity prices pointing toward optimistic profit potential, higher interest rates temper the celebration. Interest rates on farm loans to farmers are 3.5 to 4.5% higher this spring than in 2021. In the Ag Finance Update report published by the Kansas City Fed, average interest rates are the highest since 2007.

The majority (75%) of the new loans in FY23’s first quarter hold an interest rate above 7%. For perspective, more than half of loans had interest rates below 5% from 2011 to 2020. The Fed has raised rates nine times since March 2022 to calm inflation. This effort has been successful. The U.S. inflation rate has dropped to 5% after topping a whopping 9% last June.

Read more on farm loan interest rates and inflation here.