Last week’s update from the Kansas City Federal Reserve Bank (“Credit Situation and Farmland Values Remain Strong as Agricultural Economy Slows”), said Nate Kaufman and Ty Kreitman.Agricultural credit conditions remained strong in the first quarter, but improvement slowed as the agricultural economy eased to some extent.of pace of increase Farm loan repayment rate and farm income are Slower All participating districts increased from the previous quarter. degree of interest As the benchmark interest rate rose further, so did the proportion of agricultural loans, and the collateral requirements, which had a slightly higher share for banks, also increased. Despite rising interest rates and more measured farm incomes, Agricultural property values continued to rise at a solid pace.
Agricultural finances have been supported by historically strong incomes in recent years, but profit prospects are deteriorating due to higher production costs and slightly lower commodity prices.
Kaufman and Kleitman explained: emphasize production costs, higher interest rates And weather conditions will be a major risk in the coming months. ”
” Rise in agricultural loan repayment rates slows That figure is expected in the first quarter, according to the Federal Reserve’s Farm Credit Survey,” the report said.
Regarding farm income, the Kansas City Fed said, “Loan repayment rates have stabilized as farm income has been restrained.” Similar to credit conditions, the pace of improvement in agricultural income slowed in all participating districts.”
Last week’s update was more specific on interest rate levels, noting that “farm loan rates have been low on average.” 40 basis points and Up 300 basis points from the previous quarter and a year ago, Each. “
Turning to the value of farmland, Kaufman and Kleitman state:Farm property values continued to rise at a firm pace apart from Downward pressure from rising interest rates and some restraint on agricultural profits.
“Non-irrigated farmland values increased by about 10% year-on-year in all reported regions. The pace of growth in agricultural property values has slowed from the rapid increases in 2021 and 2022, but remains resilient. ”