Midwest Farm Economy Dips in Second Quarter
The farm economy in seven Midwestern states dipped in the second quarter of 2018, alongside a sharp drop in prices of key commodities and weakened agricultural credit conditions. The Kansas City Federal Reserve Bank’s Agricultural Credit Survey released Thursday shows that despite challenges in the farm economy, farmland values have remained relatively steady and provided ongoing support to agricultural credit markets. A decline in farm income accelerated slightly in the second quarter as crop prices plummeted in June.
Farm income was expected to remain subdued in the coming months, especially in states more heavily concentrated in commodities, such as soybeans, that have been targeted by retaliatory tariffs. The report says that ongoing weakness in the farm economy continued to dampen spending throughout the sector, and bankers indicated they expect borrowers to continue to reduce spending in coming months. Agricultural credit conditions also weakened at a slightly faster pace in the second quarter, and bankers continued to report a modest increase in problems with loan repayment.