The Wisconsin Bankers Association says that banks finished 2022 in a strong financial position. The data says that people are paying down their debts and are putting money into savings at the bank. On the agriculture side, farmers have also been paying off loans. Farmland values also stay strong.
Mark Binversie is a senior vice president at Nicolet Bank. He says many farmers prepaid seed, fertilizer and feed before the new year. This is because farm income in 2023 is expected to be lower than in 2022.
He says the last couple of years, ag lending has been “extremely good.”
“People built liquidity… they were able to pay their lines of credits down and they have availability in case they have to reach to it,” Binversie says. “It’s like having a Master Card paid to zero and then at least you have a place to go to if you have to grab some money quick.”
He adds interest rates continue to be a hot topic, with the prime rate — an underlying index for most home, auto and personal loans — reaching 8 percent. He reminds us that before the COVID-19 pandemic — roughly four years ago — interest rates were in the 5-6 percent range.
“History does repeat, and we lived through the 5.25 and 6 percent rates,” he says. “I think we’ll live through this. We just don’t like the taste.”
Despite elevated interest rates and inflationary pressures, farms are investing in their farms this spring.
“In the dairy industry, there are buildings being built but they’re not as massive and plentiful as years ago,” he says. “I see more robotics and investing into things to cut down their labor.”
The WBA Ag Banking Conference is April 13-14 in the Wisconsin Dells.
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