Lower Income Continues to Pressure Farm Finances

Farm income and credit conditions continued to deteriorate in the third quarter of 2018, according to a Federal Reserve Bank survey. The Tenth District Survey of Agricultural Credit Conditions shows more than half of bankers reported lower farm income compared to a year ago, and the decline in farm income was sharpest in states with higher concentrations in corn and soybeans. The district includes seven Midwest and Plains states in the Western Corn Belt. The survey found prices for most major commodities remained lower than a year ago amid elevated supply expectations and ongoing trade disruptions. The prolonged period of depressed farm income has placed more pressure on borrower balance sheets. According to bankers across the region, many crop producers in 2018 had a modest deterioration in working capital. For the fifth straight year, a majority of bankers reported having borrowers with some depletion of short-term operating funds. Stress on farm finances also contributed to an increase in the expected sale of mid- to long-term assets in 2018.