Higher corn and grain costs have resulted in food producers, particularly in livestock and dairy, seeking bigger lines of credit and long loan terms. Rising prices for fuel, fertilizer and seeds are also contributing factors. According to The Wall Street Journal: Overall agriculture loans at banks, thrifts, and credit unions rose 11 percent in the second quarter from a year earlier, according to SNL Financial. Bankers expect demand for agricultural loans to continue to increase.

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  • Agricultural loans at U.S. Bancorp rose almost 13 percent in the second quarter from a year earlier, to $980 million, while overall loans rose 8 percent. In the first two months of the third quarter, U.S. Bancorp's agricultural loan commitments were up another 10 percent.
  • At Rabobank's U.S. operations, agricultural loans rose 50 percent in the second quarter from a year earlier, to $3.2 billion. Rabobank is the second-largest agricultural lender in the U.S.
  • Bankers like the loans because agricultural borrowers are heavy users of credit, boast high incomes to fund repayment, and because the collateral is attractive. Interest rates on agricultural loans are about 2 to 3 percent over the 30-day Libor rate, which is currently at around 0.2 percent. PD

—From The Wall Street Journal (Click here to read the full article.)