Farm income in the Central and Southern Plains remained weak in the second quarter, but the pace of decline slowed, reports the Federal Reserve Bank of Kansas City. Slightly more than 40% of bankers report that farm income was lower, compared with almost 75% and 60% at this time in 2016 and 2017, respectively. That's according to the bank's quarterly survey of agricultural bankers in Kansas, Nebraska, Oklahoma, western Missouri and the mountain states of Colorado, northern New Mexico and Wyoming.
Following a nearly 20-year low in 2016, the pace of decrease in farm income has remained relatively stable since the end of 2017, the banks notes. Crop prices increased in the second quarter and the United States Department of Agriculture announced a continuation of the Market Facilitation Program in 2019. These developments may have led to less pessimistic expectations about farm income in coming months, the bank concludes.
Despite expectations for higher crop prices and farm income, severe weather and flooding could dampen the outlook for some farm borrowers in 2019, the bank states. In the bank's district, almost 50% of farm borrowers were impacted by extreme weather or flooding. Although only 20% of farm borrowers were impacted significantly by weather, those directly impacted by flooding or extremely wet conditions could be at risk of lower yields and revenues, the bank notes.
Farm real estate values across its district were nearly unchanged from a year ago in the second quarter, the bank reports. The value of all types of farmland declined modestly in Nebraska and increased slightly in all other states except the mountain states. Ranchland values exhibited the largest changes, declining 7% in Nebraska and increasing 7% in western Missouri.
The annual change in farm real estate values was also similar to other recent quarters, the bank states. The value of all types of farmland in the district has held relatively steady despite downward pressure from weak farm finances and recent increases in interest rates. Compared with the preceding period of sharp increases in the value of all types farmland, the decline since 2015 has been modest. For example, based on the sum of annual percent changes in each quarter since 2015, nonirrigated cropland values have dropped about 50%, a modest change in comparison with the cumulative increase of nearly 300% from 2010 to 2014.