WASHINGTON -- Farm credit data is not complete enough to reach conclusions on the state of the commercial farm credit markets and the use of loan restructuring as an alternative to foreclosure by financial institutions receiving government assistance through the Troubled Asset Relief Program, the Congressional Oversight Panel on TARP said in a report issued July 21.
The panel said Congress should create a farm loan performance reporting requirement so the situation could be better evaluated.
The panel concluded that the agriculture sector has been doing relatively well in comparison with the rest of the economy, but that "the stresses of the rest of the economy may be catching up to the farm sector," with credit availability tightening and farm loan delinquencies and charge-offs rising.
The panel said that if negative trends in the farm economy continue, making modifications on farm loans mandatory for banks receiving TARP funds is an option, but that it would have a limited impact because commercial banks hold only 45.42 percent of overall farm debt and TARP recipient banks hold only 27.5 percent of the commercial bank portion of total farm real estate bank loans and 10 percent of all farm debt.
The panel also noted that assistance to a particular troubled sector such as the dairy industry might have a bigger impact than a bank mandate.
