Ag Credit Survey: Strong Farm Economy Supports Ag Credit Conditions


A sharp turnaround in agricultural economic conditions and lasting support from government programs is boosting farm income and loan repayment rates. Both increased from a year ago at the fastest pace on record. The Kansas City Federal Reserve Bank released its quarterly Ag Credit survey Thursday.

The survey shows the improvement in farm finances eased credit issues and contributed to softer demand for farm loans. With support from a strong farm economy and historically low interest rates, farm real estate values rose ten percent from a year ago, the largest increase since 2013. The outlook for profit opportunities in 2021 remains strong for most farmers as commodity prices remained well above recent years. Conditions in the cattle industry remained somewhat weaker, however, and drought continued to hinder conditions for some farmers and ranchers.

Nearly all banks in the KC Fed district reported that production expenses for crop and livestock producers increased, and cash rental rates also increased, which could pressure margins going forward.