Improved Agricultural Economy Results in Looser Credit Standards

The agricultural economy in the Tenth District of the Kansas City Fed has been facing challenging times in recent quarters, as commodity prices have decreased and production costs have increased. As a result, farm income in 2023 is likely to be lower than it was a year ago. Despite this, agricultural loan performance has remained steady, thanks to strong finances and continued support from the region’s lenders. According to NAFB.com, credit conditions in the district have softened slightly due to these challenges, with loan repayment rates being lower than they were a year ago for the second consecutive quarter. However, this softening has been more pronounced in areas heavily affected by drought, while areas primarily focused on cattle production have seen less of an impact. Agricultural real estate values in the region have remained stable despite the challenges faced by farmers and their businesses.