By Scout Nelson
Farmers in the Ninth District are facing continued financial pressure despite favourable weather conditions for crop production this summer. According to the Minneapolis Fed’s second-quarter Ag Credit Survey, farm incomes decreased across the region as lower grain prices and high operating costs squeezed producers.
Lenders reported that 81 percent of farm incomes dropped compared to a year earlier, marking two years of weaker returns following a brief period of strong earnings. Only 2 percent of lenders noted income increases.
Capital spending also fell, with 69 percent of respondents reporting reduced investment in machinery and buildings. Farm household spending edged down as well, with nearly one-third of lenders noting decreases.
With tighter cash flow, farmers turned to credit. Loan demand rose, loan renewals increased, and repayment rates weakened. About 43 percent of lenders said repayment rates fell from last year. While most banks held collateral requirements steady, 14 percent increased requirements, reflecting more cautious lending. Interest rates for farm loans fell slightly but remained high overall.
Land values showed mixed results. Non irrigated cropland values were steady across the district, down by 0.1 percent from last year. Irrigated cropland values rose 2 percent, and pastureland also gained 2 percent.
Regional differences emerged: non irrigated cropland values dropped in North Dakota. Cash rents also shifted, with non irrigated land rents down 4.7 percent and irrigated land rents down 0.6 percent, while ranchland rents climbed 8.3 percent.
The outlook for the third quarter remains weak. Nearly three-fourths of lenders expect farm incomes to decline further, with capital and household spending likely to drop as well. Loan demand is expected to increase, while repayment challenges will persist.
Photo Credit: gettyimages-oticki
Categories: North Dakota, Crops, Weather