News

Fed survey indicates repayment issues

A Kansas City Federal Reserve survey says the farm economy in the Fed’s Tenth District dipped in the second quarter of 2018 as commodity prices dropped, weakening agriculture credit conditions. Despite that, the survey indicates farmland values in the seven states have remained about steady, which has supported agricultural credit markets.

The farm income decline accelerated slightly in the second quarter corresponding to the June commodity price slump. Farm income is expected to remain under pressure in coming months, especially in states more dependent on soybeans targeted by retaliatory tariffs.

The weak farm economy continues to dampen spending.  Bankers say they expect belt tightening in coming months. Bankers also say there’s a modest increase in loan repayment problems. Nearly 30 percent of the dollar volume of farm loan portfolios is experiencing at least a minor repayment issue.

Even though there’s little change in farmland values, it’s expected that rising interest will eventually cut into the farm real estate market.