The Tenth District of the Kansas City Fed has seen a softening of credit conditions due to the struggling farm economy, according to NAFB.com. While loan repayment rates and farm income have been lower than expected for two consecutive quarters, this trend is more pronounced in areas heavily affected by drought, though less so in regions primarily focused on cattle production. Despite these challenges, agricultural real estate values in the region have remained stable.
The agricultural economy has weakened in recent quarters as commodity prices decreased and production costs increased. This has likely led to a reduction in farm income for 2023. However, despite the softening of finances and high-interest costs, agricultural loan performance remains steady with support from strong financials over the past two years.