For the first time since 2013, Indiana's Farm Service Agency is running out of loan funding for banks and farmers. A spike in applications has the FSA is approaching its own lending record.
The agency lends money in two ways: directly to farmers for costs such as equipment upgrades or crops, and to local lenders as a sort of insurance on loans those groups give to farmers.
Indiana farm loans chief Greg Foulke says the latter has been the problem this year. Farmers are still recovering from low commodity prices and a rainy growing season that hurt their 2015 yields.
"There was a lot of people that even with crop insurance had shortages, and weren't able to pay all their operating loans back or maybe meet all their annual payments," Foulke says.
So banks are asking the FSA to balance their books. It's caused a major spike in lending -- $170 million has been given out, with four months left in the fiscal year.
|Click the regions to see how much farm loan money total the FSA had given out for the fiscal year by May 2015, compared to May 2016. (Data courtesy FSA)|
That’s on track to beat the record of $181 million. But since all states share the same loan pool, it’s hard to tell when there won’t be any cash left for Indiana.
Foulke thinks it will happen by July. Then, they’ll start queueing applications to get funded once Congress replenishes the FSA budget. Foulke says most farmers have the money they needed for this year's crops -- but the wait could cause new real estate deals to fall through.