The Federal Reserve says farmers are borrowing more to cover their operating expenses because farm income continued to decline in during the second quarter in Midwestern and Western states.
The Federal Reserve Bank of Kansas City, Missouri, said Thursday that 75 percent of the bankers surveyed reported shrinking farm income.
Roughly half of the bankers said loan repayment rates were lower in the second quarter. And the number of loans with severe repayment problems grew to 7 percent. That's up from roughly 3 percent in 2011 to 2013.
The 10th Federal Reserve District covers Kansas, Nebraska, Oklahoma, Wyoming, Colorado, northern New Mexico and western Missouri.
The value of irrigated farmland in the region fell 5 percent while non-irrigated land and pastures both declined 3 percent.