There’s a reason that American farmers seem sour these days.
“Despite good harvests, farm income continued to fall,” said the U.S. Federal Reserve Bank of Minneapolis in its Feb. 14 Agricultural Credit Conditions Survey.
Bountiful crop production isn’t enough to stop the vise tightening on American farmers, the Minneapolis Fed noted, which could make things grim if crop production falls off.
“Given the role of strong harvests in bolstering farm incomes, some lenders expressed concerns about that luck running out.”
The issue was also raised at the Senate’s banking committee hearings, in which despite claims of the U.S. economy “booming,” much of the rural economy seems weak.
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“The bigger picture is just that crop prices have been low,” said Federal Reserve Board chair Jerome Powell.
“Obviously the trade issues haven’t helped.”
U.S. farmers are investing less, and loan repayment rates have fallen. Farmland prices have eased slightly, even as rental rates have remained steady.
North Dakota was an exception to the generally lacklustre U.S. farmland markets, with prices jumping almost 10 percent from year-before levels.
Lenders said in the survey that their biggest fear for 2019 was falling commodity prices. Farmers aren’t doing well, and doing worse could have bad consequences.
“A year of average yields with current commodity pricing would be very detrimental to our area’s farm operations,” the Minneapolis Fed quoted one Minnesota lender as saying.
