By Anna Pope
An Ag Finance Update from the Federal Reserve Bank of Kansas City shows farm income and loan repayment rates weakened in the third quarter.
Persistently high input costs and lower commodity prices have impacted farm incomes, making it harder for people to repay loans, according to the update from November. The report also found the average interest rates on farm loans lowered slightly.
Cortney Cowley, a senior economist at the Federal Reserve Bank of Kansas City, said agricultural lenders are responding to changing interest rates. The size of loans is increasing while the debt costs are decreasing.
The Ag Finance Update collected data from a large region from Dallas to Minneapolis. Cowley said the slowdown is happening in all regions.
“It’s really across everywhere, but particularly in those regions that I would consider more concentrated in crop production,” Cowley said.
But because Oklahoma is big in cattle production, she said the declines were smaller than other crop-centric regions. Rod Moesel, president of the Oklahoma Farm Bureau, said farmers are under cost pressures, face weather challenges and now lower commodity prices.
He said beef production is a bright spot. Although cattle numbers are low and demand has driven up beef prices, Moesel said input costs are still high for ranchers.
“Even though they're in a more profitable situation than many of the crop producers, they're in a squeeze because of the high cost of inputs to feed their animals and take care of their animals,” Moesel said.
Cowley said while the U.S. economy is strong, there’s been a slowdown globally..
For the past couple of years, she said, the U.S. has seen a reduction in exports of agricultural commodities, especially crop commodities, leading to a larger inventory.
“When you have large supplies, markets know that they don't have to pay as much for that product,” Cowley said. “So, prices start coming down because you have a surplus of crops.”
Click here to see more...