Now, farmers face an agricultural economy which has stabilized, but has yet to rebound.
Economists with the Federal Reserve Bank of Kansas City report although farm income is down from a year ago, it hasn’t dropped as much as it has in recent years.
Nate Kauffman, Omaha branch managed with the KC Fed, says farmers continue to operate under stressful conditions.
“In most cases though it hasn’t led to a lot of widespread default rate increases. So, even though we’re continuing to see some of that increase in financial stress, it doesn’t seem to be so far that it’s affecting the entire sector,” Kauffman tells Nebraska Radio Network.
A report recently released by the Kansas City Federal Reserve Bank says farm income in the seven-state 10th District decreased in the third quarter of this year, but at a slower rate. Most bankers reported to the Fed that farm income fell for the 13th consecutive quarter, but the pace of the decline lessened. A slight majority of bankers believe the drop in farm income might well end in the fourth quarter.
The Federal Reserve says bankers in Nebraska, Kansas, and Oklahoma expect the drop in farm income to slow in the months ahead.
Kauffman says a survey of bankers indicates they are optimistic long-term, even in the midst of a challenging farm economy.
“I think a lot of lenders might have some borrowers who are facing increasing financial stress and a decent share of their portfolio maybe that’s still actually making money,” Kauffman says. “So, I think that it really depends on a case-by-case basis.”
Kauffman says corn farmers might be under the biggest financial stress, with soybean prices holding up a bit better. Livestock producers might be faring best after some difficult years.
Though commodity prices have yet to truly bounce back, those in agriculture seem more optimistic, Kauffman says. Land prices have held steady for the most part, providing many producers with equity. Kauffman says many producers have been working to cut costs, improve efficiencies, and implement risk-management strategies to cope. He says they cannot control the prices, so they are working on anything they can control.
AUDIO: Brent Martin reports [:50]