Farm Lending Variables- Updated Analysis From the Kansas City Fed

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.
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Drought in High Plains- “Simple Survival” a Goal for Some

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."
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Dallas Fed Ag Credit Survey

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."
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Despite Some Alarming Signs, Repeat of 1980’s Farm Crisis Seen as Unlikely

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."
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Senate Ag Committee Examines the Farm 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.
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Wall Street Journal- Special Section on Agricultural Issues

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.
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