Credit Conditions Remain Solid Despite Lower Farm IncomeThu, 14 Aug 2014 11:31:50 CDT
Most agricultural bankers in the seven-state Tenth District reported solid credit conditions in the second quarter of 2014, but longer-term concerns about credit quality have begun to emerge, according of the Federal Reserve Bank of Kansas City’s quarterly Survey of Agricultural Credit Conditions.
Although bankers reported very few past-due farm loans, loan repayment rates have weakened since last year, particularly in crop-producing regions. Credit standards, however, were little changed and bankers indicated funds were available to satisfy a sharp rise in loan demand.
Despite continued strength in the livestock sector, Tenth District farm income remained well below year-ago levels due to falling crop prices and poor winter wheat yields. Most bankers surveyed acknowledged a connection between the strength of the farm economy and Main Street business activity in rural communities. While half of survey respondents felt a strong farm economy was supporting further economic growth in their areas, 40 percent saw signs of weakness in the farm economy that was also dampening Main Street business activity.
Cropland values generally held at high levels while strong demand for high-quality pasture pushed ranchland values higher. Current trends in farmland values were expected to continue for the rest of the growing season with cropland values holding at high levels and ranchland values rising further.
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