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KC FED: FARM INCOME DECLINES BOOSTS LOAN DEMAND
Nov. 17, 2014
Source: Federal Reserve Bank of Kansas City news release
In the third quarter of 2014, agricultural bankers in the seven-state Tenth District reported increased demand for farm operating loans amid further declines in farm income, according to the Federal Reserve Bank of Kansas City's quarterly Survey of Agricultural Credit Conditions.
Farm income expectations have fallen in 2014 as the potential for record yields was not expected to fully offset sharp declines in crop prices. Bankers surveyed noted that reduced working capital for crop producers contributed to a rise in the need for short-term loans to the farm sector.
In fact, 55 percent of bankers surveyed reported a modest
deterioration in the level of working capital for crop producers in their lending area relative to last year, and 10 percent reported a significant deterioration.
After several years of strong price appreciation, Tenth District cropland value gains have dropped considerably. In fact, nonirrigated and irrigated cropland values declined modestly from last quarter and were hovering just above year-ago levels by 1 percent and 2 percent, respectively.
About a third of agricultural bankers in the survey also expected cropland prices to decline further, while less than 5 percent anticipated value gains. Ranchland values, however, were still rising, although at a slower pace than in the past several years.
The complete survey is available at www.kansascityfed.org/research/indicatorsdata/agcredit /index.cfm
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