The prolonged downturn in the farm economy continued in the second quarter of 2017.
However, data from the Kansas City Fed’s Survey on Agricultural Credit Conditions shows the farm economy may finally be starting to stabilize. While economic conditions did continue to weaken in the second quarter, the pace of that deterioration has slowed.
While the farm loan repayment rate continued to decrease, the change from a year ago wasn’t as sharp as it’s been in recent years. 37 percent of bankers surveyed in the Tenth District reported a decrease in repayment rates from a year ago, which is the lowest rate since mid-2015.
In a similar situation to credit conditions, farm sector income continued to weaken but not as rapidly as in recent years. Most Tenth District bankers expect the decline in farm income to be slower this year than in 2016. 85 percent of those same bankers say the decline in farm income continues to pressure economic activity in rural areas.
Farmland values also continue to trend lower along with the decline in farm income. The value of cropland and ranch land continued to drop in the Tenth District for the sixth straight year.