Farm Finances Weaken Further Amid Uncertainty

KANSAS CITY- Farm credit conditions within the Federal Reserve’s Tenth District steadily deteriorated in the third quarter of 2019. The Kansas City Fed Report says in spite of a slight increase in the price of some agricultural goods, as well as additional support from government payments, farm income declined at a modest pace.

Loan repayment rates also declined at a modest pace in the third quarter. District bankers say agricultural economic conditions were influenced by uncertainty about crop production, agricultural trade uncertainty, as well as a variety of other factors, all contributed to commodity price fluctuations. Continuing weakness in the ag sector put even more pressure on farm finances. Signs of modest increases in credit stress continued in the third quarter of 2019. Farm borrowers made additional cuts in spending in response to the continued lower-revenue environment.

75 percent of bankers reported farmer working capital deteriorated at least modestly in 2019, compared with 90 percent as recently as 2016. However, farmland values continue to be a positive note in the sector. Those values remained stable and continue to provide ongoing support to an otherwise struggling economic sector.