Happy lending? Credit to agriculture, US vs Germany

Fresh datasets by the FAO allow for comparisons of credit trends across the globe. We look at how agriculture has fared relative to other sectors in two of the largest developed economies.

In 2015, agriculture captured less than 3 percent of total credit from domestic commercial banks, despite contributing about 4.3 percent to global GDP. That means farmers secured a lower share of credit than producers in other industries. Of course, this had consequences: being able to borrow on affordable terms is crucial for operators looking to finance input purchases; this is accentuated by the time lag that exists between planting seeds or raising livestock and generating revenues from crop or animal sales.

The picture, however, is more complex than the headline suggests. First, developing countries tend to lend much more to the sector than developed peers: take Zambia, for which agriculture captured 18.6 percent of total credit during 2011-15, or Malawi, where it secured more than 20 percent over the same period. But even among developed nations, situations vary widely. Germany is among those leading the pack, at 3.8 percent last year, while the US is in the slow lane, at less than 1 percent. That is despite a sharp rise in American farmer debt since the early 2000s.