Farm Income and Credit Conditions Continue to Improve

OMAHA, NE – Alongside a sharp turnaround in agricultural economic conditions and lasting support from government programs related to pandemic relief, both farm income and loan repayment rates increased from a year ago, at the fastest pace on record. The improvement in farm finances eased credit issues and contributed to softer demand for farm loans explains Nathan Kauffman with the Kansas City Federal Reserve.

With support from a strong farm economy and historically low-interest rates, farm real estate values rose 10 percent from a year ago, which was the largest increase since 2013 and the outlook for profit opportunities in 2021 remained strong for most agricultural producers as commodity prices remained well above recent years.

Conditions in the cattle industry remained somewhat weaker, however, and drought continued to hinder conditions for farmers and ranchers in some areas of the 10th District.

Nearly all banks reported that production expenses for both crop and livestock producers increased and cash rental rates increased, which could pressure margins going forward.

Despite potential headwinds, Kauffman explains that bankers expect improvement in farm income and credit conditions to continue in the months ahead.
(SOURCE: All Ag News)