Although ag bankers in the Midwest and Plains say the administration's multibillion-dollar trade war payments were a boon to farmers and ranchers, some lenders are still concerned about underlying weaknesses in the sector.
For the first time since the summer of 2015, farmland values in the Midwest are holding steady, says the Chicago Federal Reserve Bank. In a quarterly survey, agricultural bankers told the regional Fed that they expect land values to remain stable through spring.
Agricultural credit conditions throughout the Tenth Federal Reserve District of western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico continued to deteriorate in the second quarter of 2016, the Federal Reserve Bank of Kansas City reported, and bankers "expect farm income to remain weak in the third quarter."
Main Street businesses in the Plains are feeling the pinch of lower commodity prices while producers throughout the Farm Belt are watching their pennies, said quarterly reports from three regional Federal Reserve banks.
Even with the boom years of 2003-14, agriculture's share of the Midwestern economy is shrinking, to 1 percent or so, said a paper from the Chicago Federal Reserve Bank.
Iowa farmland values fell by 9 percent this year, the largest decline since 1986 during the agricultural recession, pulled down by falling commodity prices, said an Iowa State University survey.
Crop farmers are seeing much lower incomes this year, down by an average 25 percent in the Plains, according to agricultural bankers in the Farm Belt.
Cropland values are steady or starting to erode while ranch and pasture land is rising in value, say agricultural bankers in the Midwest and central Plains.
Farmers and ranchers are tightening their purse strings and spending less in town, say farm bankers across the Farm Belt. With farm income down due to sharply lower commodity prices, cutbacks are expected to continue into the fall at a minimum.