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Production costs drive spike in ag lending

The volume of non-real-estate agricultural loans, including those to livestock operations, increased significantly during the second and third quarters of 2012 according to a report from the Federal Reserve Bank of Kansas City. The volume of non-real estate farm loans jumped more than 5.0 percent during the second quarter compared to last year, while average interest rates on most types of agricultural loans were lower, as were delinquency rates.

During the second quarter, farm operating loans rose at their fastest pace in five years according to the report. That trend continued into the third quarter, as data from the first full week of August show the volume of short-term operating loans up 36 percent compared to the same time last year, reaching a new survey high.

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