Farm Economy Looking for Solid Footing

The farm economy in the seven-state area that makes up the Kansas City Federal Reserve district continues to show signs of stabilizing in the third quarter of 2017. According to the Kansas City Fed’s quarterly Survey of Agricultural Credit Conditions, that news comes as financial stress continued to build and income continued to decline.

Farm income was lower than last year but the decrease was smaller than in recent years. Banker expectations of future declines in farm income moderated throughout the District during the third quarter of this year. Farmland values are somewhat lower than a year ago. The value of irrigated and non-irrigated cropland declined three and six percent, respectively. While the decline hasn’t reached the magnitude of the 1980s farm crisis, the duration of the downturn in cropland values has approached that of the 1980s.

Farm loan repayment rates declined for the 16th consecutive quarter, which is indicative of the prolonged downturn in the District’s farm economy. Although lenders continued to report increasing financial strain among their agricultural borrowers, bankers indicated that a sharp increase in the sale of farm assets was unlikely.

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