While commodity prices have remained generally stagnant, strong yields last year helped support farmers’ bottom line. That opinion was shared during last week’s Senate Committee on Agriculture, Nutrition, and Forestry.
Nathan Kauffman, economist for the Kansas City Federal Reserve says the degree of financial stress varies by region.
The western part of his district, which is heavy in livestock production, had a more difficult time with loan repayment than the grain intensive states to the east.
“Financial stress in the farm sector has increased more significantly in regions where cropland is generally less productive and in regions concentrated in markets that have been particularly weak, such as cattle and wheat,” said Kauffman. “In other areas, strong crop yields last fall resulted in cash flows that were better than expected, and financial conditions have been more stable recently in those regions.”
Kauffman expects downward trends to continue in the near term as global supplies are likely to continue to weigh on grain prices and profit margins.