On Friday, Nathan Kauffman and Matt Clark, of the Federal Reserve Bank of Kansas City, penned an update titled, "Farm Lending Steady, but Risks Remain," which noted that, "Agricultural lending at commercial banks was steady in the second quarter, but risks in the farm sector continued to weigh on loan growth and credit conditions." Today's post looks at the Kansas City Fed article in more detail.
Associated Press writer Blake Nicholson reported on Saturday that, "Drought in North Dakota is laying waste to fields of normally bountiful food and hay crops and searing pastures that typically would be home to multitudes of grazing cattle. Some longtime farmers and ranchers say it’s the worst conditions they’ve seen in decades — possibly their lifetimes — and simple survival has become their goal as a dry summer drags on without a raincloud in sight."
On Wednesday, the Federal Reserve Board released its June 2017 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District. The report included several observations pertaining to the U.S. agricultural economy.
Earlier this week, the Federal Reserve Bank of Dallas released the results of its 2017 Second Quarter Agricultural Credit Survey, which stated that, "Demand for agricultural loans overall decreased for a seventh consecutive quarter. Loan renewals and extensions continued to increase, albeit at a slower pace. The rate of loan repayment stabilized after declining for two years. Overall, the volume of non-real- estate farm loans was lower than a year ago, as was the volume of farm real estate loans. The volume of operating loans increased; all other loan categories’ volumes fell year-over-year this quarter."
In the spring edition of the Agricultural Policy Review, Iowa State University agricultural economist Wendong Zhang penned an article titled, "Four Reasons Why We Aren’t Likely to See a Replay of the 1980’s Farm Crisis," where he explained that, "There are plenty of alarming signs indicating a possible farm crisis: current corn prices are half the 2013 peak level of US $7/bushel; farm income has declined for major commodities (corn, wheat, cattle), falling from the previous year to levels well below recent years; weak farm income and worsening credit conditions continue to trim farmland values, which are expected to trend lower in the months ahead, thus weakening the equity position of producers and the collateral value for lenders. Given the heightening farm financial crisis, many agricultural lenders, academics, and other stakeholders in the US farm sector worry another farm crisis is looming. However, there are four economic and legal reasons why this farm downturn is unlikely to slide into a sudden collapse of agricultural markets."
On Wednesday, the Federal Reserve Board released its May 2017 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District. The report included several observations pertaining to the U.S. agricultural economy.
Yesterday, the Senate Ag Committee held a hearing titled, "Examining the Farm Economy: Perspectives on Rural America," where lawmakers heard testimony from four witnesses, including the Chief Economist from USDA, and a Federal Reserve Bank district economist. Today's update provides an overview of yesterday's meeting with particular emphasis on crop prices, land values, and trade. Recall that the House Ag Committee held a similar hearing on the farm economy back in February.
Donnelle Eller reported on the front page of Sunday's Des Moines Register that, "This year could be pivotal for many Iowa farmers, battling to turn a profit as they plant 23.4 million corn and soybean acres across the state. Financial pressure is beginning to show."
Secretary of Agriculture Sonny Perdue testified before the House Agriculture Committee yesterday at a hearing on the “State of the Rural Economy.” Today's update includes an overview of the testimony provided by the former GOP Governor of Georgia, as well as as some of the issues lawmakers addressed during the hearing, which lasted over three hours.
Yesterday's Wall Street Journal included a special section on agricultural issues. The section included several articles that covered a variety of different topics ranging from urban farming, to creative new uses for crops, to export shipping issues. Today's update highlights articles in yesterday's paper that focused on farmer's adaptation to weather changes, the use of big data, and the ultrafiltered milk trade dispute with Canada.