How Higher Interest Rates and Inflation are Impacting Farm Financing Decisions

From left to right: Chase Harris, Natalie Schwartz, and Tanner Prible with Farm Credit Mid-America. Photo: C.J. Miller / Hoosier Ag Today.

Even though Indiana farmers saw higher yields and higher grain prices last year, they also saw higher interest rates and higher inflation, which is having an impact on farm financing decisions.
“Right now with the interest rate market we have, a lot of people are just opting to go ahead and pay cash,” according to Chase Harris (shown above at left), Financial Officer with the Hagerstown office of Farm Credit Mid-America. He says there’s been a shift in how Hoosier farmers have been borrowing money for their farms.

“The last several years, we’ve had rates in that three-to-four percent range,” says Harris. “At that point, a lot of people are borrowing the 100% of cost of the purchase of that farm. Now, with six, seven and maybe even eight-percent interest rates, people are a lot more likely to put down 25-to-50 percent just to bring down that interest cost.”

“Not everything’s negative when it comes to high interest rates,” Harris says. “Obviously, your money in the bank is worth more. For example, our Farm Cash Management Account right now is paying over three percent, so you know your money’s worth a little more now.”
He also says more farmers are financing for other reasons.

“A lot of farmers right now are looking at ways to diversify their operation,” according to Harris. “Maybe that’s through a tiling business? Maybe that’s through livestock? So, if grain prices do suffer, they’re not so dependent on that income stream and they have other things to fall back on to diversify through the tough times.”

Harris says if you plan on financing in 2023, it’s best to sit down and map out your budget and how much cash you have on hand to help lower your borrowing costs.

“If you know what acreage you’re going to be farming, you can kind of budget equipment upgrades along the way,” says Harris. “Whether you plan to pay cash for those? Maybe a land purchase is something you have aspirations of and are really putting pen to paper to see how feasible that is for your farm, not just this year, but for the next several years to come.”
To work with a Farm Credit Mid-America financial officer near you, visit

Click BELOW to hear C.J. Miller’s news report and interview with Chase Harris, Financial Officer with the Hagerstown office of Farm Credit Mid-America, as they discuss the ways higher interest rates and inflation are impacting farm financing decisions.


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