Farm Economy Softens Further, But Shows Signs of Stabilizing

A prolonged downturn in the agricultural economy continued in the second quarter of 2017, but recent data suggest conditions in the farm sector may be stabilizing. Although farm income and farm real estate values continued to decline, and credit conditions weakened further, the pace of deterioration has slowed. With the fall harvest approaching, agricultural lenders and borrowers remain concerned about prospects for the farm economy in the Federal Reserves Tenth District, particularly in regions with limited potential for high crop yields. However, bankers were generally less pessimistic about economic conditions in the farm sector in the second quarter than in each of the past two years.

Agricultural Credit Survey

Additional information on the Ag Economy

The outlook for the farm economy in the Tenth District remained subdued in the second quarter, but changes in coming months may not be as severe as in recent years. Following a sharp drop in crop prices in 2013, income in the farm sector also dropped rapidly, agricultural credit conditions deteriorated, and farmland values cooled. However, agricultural commodity prices have steadied recently, and have rebounded in the cattle sector. As prices have stabilized, albeit at a relatively low level, the pace of declines in the farm sector also may be less pronounced than in recent years.


Story source: Kansas City Federal Reserve Bank release

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