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2026-05-26 08:30:02
[Iran War Impacts US Agricultural Loans: Soaring Costs, Rising Loan Demand, and Increased Bank Attention] (1) The Middle East conflict has led to soaring fuel and fertilizer costs, posing new challenges for US farmers following Trump's tariffs last year that suppressed agricultural exports. To cope with rising costs, farmers' demand for loans continues to increase. A Chicago Fed survey shows that agricultural loan demand increased year-over-year for the 10th consecutive quarter in the first quarter, while the loan repayment rate index declined for the 10th consecutive quarter. (2) Farmers are cutting back on spending: reducing planting, switching to low-fertilizer crops, or reducing fertilizer use to control costs, but this increases the risk of reduced yields. Banks have noticed that customers are spending more cautiously, with fewer new land purchases and equipment sales. Some banks saw an increase in agricultural loan delinquencies in the first quarter, with loans overdue for more than 90 days increasing, and set aside additional reserves (such as $1.2 million to $1.8 million) for this purpose. (3) Trump's tariffs have already severely damaged agriculture, with the number of farm bankruptcies across the US expected to surge by more than 40% year-over-year by 2025. The rising costs brought about by the Iran war may exacerbate the situation. While government loan guarantees and subsidies provide some protection for banks, they are closely monitoring their clients. Experts point out that soaring diesel prices will drive up costs at every stage, from planting and harvesting to transportation, and small farmers are particularly sensitive to rising costs.
