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U.S. bankers say lower ag income pressures farm finances

Farm incomes and agrarian credit conditions continued to erode in the third quarter of 2018, as economic pressure from the U.S.-China trade war has bankers seeing loan repayment rates fall, according to separate reports released on Thursday by the Federal Reserve Banks of Kansas City and St. Louis. Expectations for farm income and loan repayment rates were particularly low for areas and operations more concentrated in soybean, corn, hog and dairy production as uncertainties surrounding trade continued, according to the banks’ latest reports on the agricultural economy.Alongside lower loan repayment rates, farmers’ working capital deteriorated moderately while bankers’ loan portfolios in crop-producing states showed slightly higher levels of risk, the reports found.Although farmland values remained stable - or improved slightly in some areas - increasing stress in the farm sector could put downward pressure on farm real estate values moving forward, according to bankers.One key concern for bankers: How much farmland could come up for sale within the coming months, and whether that could negatively impact prices.

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Reuters
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