The conflict in the Middle East is likely to impact ag lending.
Gary Schnitkey, farm management specialist with the University of Illinois, says federal spending is ballooning because of the military action.
“Longer-term interest rates, they’re edging up.” He says, “And what’s being anticipated is that the war is costing us considerable federal dollars, and that will require borrowing. So, that’s going to raise interest rates.”
Dr, David Kohl, professor emeritus with Virginia Tech University, tells Brownfield with unemployment and inflation already up, additional borrowing squeezes the economy further.
“What I’m really concerned about is our federal debt and deficit, and will the foreign investors continue to buy our treasuries, buy our bonds, and at what price?” He says, “That could put upward pressure on interest rates.”
Kohl says a jump in interest rates would mean additional costs for farmers needing operating or other types of loans at a time when most are already feeling the pressure of tight margins.
Brownfield spoke with both at the Illinois Society of Professional Farm Managers and Rural Appraisers Land Values Conference in Bloomington.
