The agricultural economy in the Tenth District of the Kansas City Fed has been struggling in recent quarters, with lower farm income and loan repayment rates compared to a year ago. However, despite the difficulties faced by farmers, agricultural real estate values have remained stable.
The decline in commodity prices and an increase in production costs have contributed to a reduction in farm income for many producers in the region. This is particularly noticeable in areas heavily affected by drought, but less so in those primarily focused on cattle production. Despite these challenges, agricultural loan performance has remained steady due to continued support from strong finances over the past two years.
While credit conditions have softened slightly following two years of marked improvement, it remains to be seen how long this trend will continue. Nonetheless, farmers are encouraged by the stability of real estate values and will continue to explore financing options to help manage their financial burdens during these challenging times.