Growth in farm lending activity slowed in the third quarter of 2019, the Federal Reserve Bank of Kansas City has reported in the latest edition of its Ag Finance Databook.

Courtney Cowley, a Fed economist, and Ty Kreitman, an assistant economist, wrote, “Following nine consecutive quarters of year-over-year growth and a particularly notable increase a year ago, the volume of total non-real estate farm debt declined nearer to the historical third-quarter average.”

“The primary contributor to the slowdown from sharp increases a year ago was a decline in the average size of farm operating loans. Despite a slowdown in the pace of debt accumulation, weaknesses in the sector persisted, continuing to pressure farm cash flows and agricultural credit conditions.”

Chuck Abbott of the Food & Environment Reporting Network noted in an analysis published Monday that “Ag lending slowed during the summer months of July, August and September, the same period when the Trump administration announced operational details of its ad hoc Market Facilitation Program and began payments.”

“Disbursements began in late August and ran at $1 billion a week in the early days,” Abbot wrote. “At the end of September, payments totaled $5.2 billion, with Iowa, Illinois, Minnesota, Kansas and Nebraska the leading states. Up to $7.25 billion was available. The Databook, released late last week, did not discuss the possible impact of the payments.”

The Fed economists concluded, however, that “despite reduced agricultural lending activity at commercial banks in the third quarter, loan volumes in the farm sector remained elevated.”

“Alongside elevated lending levels, credit quality has deteriorated slightly in recent years at agricultural banks. In general, agricultural lenders reported that the pace of weakening in credit conditions has slowed. However, adverse weather conditions and elevated levels of debt relative to income could continue to weigh on the outlook for agricultural lending conditions in 2019.”