Kauffman Expects Slowdown In Farm Economy

When it comes to the overall farm economy, a Federal Reserve official recently told Congress he anticipates a slowdown later this year or early next.  Kansas City Federal Reserve Bank Vice-President Nathan Kauffman told House Ag lawmakers that farm credit conditions have strengthened over the past two years thanks to rising commodity prices and land values.  But the war in Ukraine has changed everything.

“While the strength of farm income these past two years is likely to sustain conditions in agriculture for quite some time, some borrowers may face heightened financial stress in the year ahead if costs continue to rise and commodity prices ease further.”

Overall, Kauffman said the U.S. farm sector seems well-positioned financially for the foreseeable future, but long-term, that’s a different story.  And when it comes to the overall economic conditions, he said one word describes the mood; uncertain.

“Uncertainty about the outlook for the agricultural economy is high and will depend significantly on global factors, particularly, the war in Ukraine and the strength of global economic activity.”

Kauffman said the war has had a “direct impact” on the price of commodities and on fuel and fertilizer inputs, creating market uncertainty, volatility, and lender concerns as farm margins tighten.

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