farmers

Strong Farm Economy Continues to Support Credit Conditions

Dan Economy

farm economy

Agricultural credit conditions improved in the first quarter of 2022, and farm real estate values continued to increase alongside strength in the American farm economy.

Following a year of accelerating increases, the value of non-irrigated cropland across much of the country has soared through March of this year. The sharp growth in land values persisted despite a slight increase in farm loan interest rates. Farm loan repayment rates continued to increase, and credit conditions remained strong.

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The Kansas City Fed says the outlook for agricultural credit conditions remained optimistic alongside persistently strong commodity prices. However, many district lenders expect conditions to soften in the coming months alongside the pressure on profit margins from higher input costs and harsh drought conditions in large parts of rural America.

Farm real estate markets also remain strong, but smaller profit margins or higher interest rates could limit gains in land value in the year ahead.

(From the National Association of Farm Broadcasters)