Heading into harvest in the Minneapolis Federal Reserve Banks’ District, farmers faced lower incomes because of falling commodity prices and rising production costs.
A third-quarter survey of ag bankers showed that while incomes fell, the decline wasn’t uniform. Districtwide, 46 percent of agricultural lenders said incomes dropped in the third quarter from a year earlier, up from 35 percent in the second quarter. More than a third of the bankers said farm household spending increased, while slightly more than half reported no change. Capital spending also dropped as 35 percent of the bankers saw decreased investment in equipment and buildings from a year ago, compared to 21 percent who reported increased spending.
“Interest rates are slowing down borrowing and capital purchases as cash flows are under more stress,” a Minnesota banker reported. Farm finances remained in good condition despite the negative hit to income. Loan repayment rate held steady.