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KC FED: AG CREDIT SURVEY SHOWS SIGNS OF FINANCIAL STRAIN BUT REPAYMENT PROBLEMS STILL MINOR
Source: Kansas City Federal Reserve Bank

Loan demand continued to grow in the second quarter, and credit conditions weakened slightly, according to respondents in the Tenth District Survey of Agricultural Credit Conditions.

Despite weakening credit conditions, most bankers reported few significant problems with loan repayment. Although repayment rates declined in most of the seven-state District, the deterioration over the past year has been relatively minor.

More than half of survey respondents reported lower farm income in the second quarter compared to last year, marking the ninth consecutive quarterly decline. Low crop prices and variable weather patterns also appeared to be holding down expectations for farm income in the next three months.

Persistently lower crop prices and emerging stress in the farm economy have affected the overall economic outlook on Main Street. In evaluating the relationship between the local agricultural economy and general business activity, many Tenth District bankers reported that a weakening agricultural economy had weakened Main Street business activity in their lending areas.

Amid lower farm income and expectations that crop prices may not improve significantly, cropland values continued to soften. Nonirrigated cropland values declined almost 3 percent, on average, from last year.

The declines were largest in Nebraska and Missouri, while values increased modestly in Oklahoma and the Mountain States. Ranchland values posted modest gains due to continued profitability in the cow-calf sector.

Read the complete survey at www.kansascityfed.org/research/indicatorsdata/agcreditsurvey.


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