Farm income “retracted at a sharp pace” in the Central Plains ahead of the spring planting season, said the Kansas City Federal Reserve Bank, based on a quarterly survey of ag bankers. Sixty percent of the lenders — the highest percentage since early 2020 — said income was lower than a year earlier.
“Strong cattle prices supported profits for cow/calf producers in recent months, but a steep decline in prices of many key crops weighed on farm incomes over the past year,” said the Kansas City Fed. More than 70 percent of ag bankers in Kansas, Missouri, and Nebraska, states with a higher share of income from row crops, said farm incomes were lower in the first quarter of this year than at the same point in 2023. Less than a third of bankers in cattle states said incomes were down.
“Low crop prices will be a struggle for our producers,” said a banker in southwest Kansas. “Producers will need to do an exceptional job of marketing their crops to have a successful year.” A banker in western Missouri said there was “a fair amount of anxiety about stagnant to falling commodity prices when compared to steady to rising inputs.”
Lenders expected farmland values and cash rental rates to hold steady through the spring months. Farmland values were 5 percent higher in the first quarter than they were a year earlier, they said. The Kansas City Federal Reserve district covers Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.
Ag bankers in the Chicago Federal Reserve district also expected farmland values to hold steady during the second quarter of the year. In the first quarter, they were 4 percent higher than a year earlier, the slowest year-over-year rise in three and a half years. Some 59 percent of ag bankers said they believed farmland to be over-valued in the first quarter of 2024.
“With the lower grain prices, we can sense a little caution with spending on land and machinery,” said an Iowa banker who took part in the Chicago Fed’s quarterly survey. The Chicago Fed district is Iowa, the northern halves of Illinois and Indiana, the lower peninsula of Michigan, and the southern two thirds of Wisconsin.