Ag Credit Conditions Continue Improving

Strength in the U.S. agricultural economy continues to drive improvement in farm income and credit conditions. As in recent quarters, farm loan repayments rates increased rapidly, and loan demand remained subdued. Bankers in the Kansas City Federal Reserve Districts also continued to report additional increases in farm income. With support from stronger farm finances and historically low interest rates, farmland values increased by at least 10 percent in almost all states in the district.

The sharp bounce back in the American farm economy over the past year has bolstered farm income and credit conditions. However, profit opportunities in the cattle industry remained more limited than other major commodities, and ongoing drought has also created concerns for some producers. But strong support from government aid programs has provided ongoing support, and the outlook for farm finances in 2021 remained strong based on recent reports across the Federal Reserve Districts. Farm income increased substantially from last year throughout all participating districts. In the Kansas City, Minneapolis, and St. Louis Districts, the majority of bankers all said income was higher than the same time last year, and less than ten percent say incomes had dropped.