Financial Stress on Farms Easing With Economic Improvements

KANSAS CITY, MO – Economic and financial conditions in U.S. agriculture continued to strengthen in the first quarter alongside ongoing increases in the prices of major row crops, according to the latest First Quarter 2021 Ag Bulletin from the Tenth Federal Reserve District in Kansas City.

The prices of corn and soybeans approached the highest mark since mid-2013 as supplies remained tight and global demand continued to firm amid broad increases in economic activity. The prolonged and gradual increase in financial stress among agricultural producers from previous years continued to ease in the first quarter with the improvement in farm revenue, historically low interest rates, and gains in farm real estate values.

The Kansas City Federal Reserve includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri, and explains that domestic agricultural prices increased by 7 percent in the first quarter, following a 10 percent increase the previous quarter. Corn prices increased 22 percent while soybean prices jumped 21 percent, and continued to provide the largest contribution to gains in ag prices. Farm income is expected to slip slightly from a year ago as a surge in crop revenue lessened the impact of a potential decline in government payments.

U.S. crop production was slightly below trend in 2020 and meat production was expected to rise further in 2021 at a gradual pace. The value of U.S. ag exports continued to increase in the first quarter, supported by ongoing purchases from China. Most measures of financial stress eased in the first quarter alongside a sharp improvement in agricultural economic conditions.
(SOURCE: All Ag News)