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 Nov. 28, 2022 Source: Kansas City Federal Reserve Bank Interest rates on farm loans increased sharply in the third quarter. Despite the higher borrowing costs, farm real estate values continued to increase, but the acceleration eased somewhat. Following consistently higher increases earlier in 2022, the value of farmland in most Districts grew at a slightly slower pace in the third quarter. Farm income and credit conditions also remained strong, but improvement was more limited. With higher production expenses, broad inflation and an uptick in financing costs, growth in household spending by farm borrowers began to outpace capital spending more noticeably. Strength in farm finances continued to support a generally positive outlook for agricultural credit conditions through the remainder of 2022, but some pressures have continued to intensify. Volatility in crop markets, higher expenses and drought are key risks, but profit opportunities remained favorable alongside strong commodity prices. Despite more measured improvement in recent quarters, farm finances remained solid following especially strong incomes across the sector the past two years. To read the entire report click here. Tweet |
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