Lenders in the Midwest tightened their purse strings in the first quarter, hurting sales of new farm equipment while farmers had trouble paying back loans.
According to the quarterly survey of Midwestern agricultural lenders by the Federal Reserve bank of Kansas City, the percentage of lenders raising collateral requirements reached a record high while loan repayments fell for the second straight quarter.
Turbulent agricultural conditions contributed to the tightening of farm credit, as farm incomes dropped and loan demand fell, according to the report from the Fed.
Bankers in Oklahoma saw an increase in loan demand but had to turn away potential borrowers due to a shortage of funds. Oklahoma lenders were also worried about indications that the state's wheat crop will come in short this year due to drought conditions.
The Association of Equipment Manufacturers reported a 20 percent decline in tractor sales during the quarter, compared to a record high last year, according to the report.
The Midwest Federal reserve district includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming as well as parts of New Mexico and Missouri.