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Agricultural credit conditions in the Tenth District remained strong in the third quarter and farm real estate values increased sharply.
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Agricultural credit conditions in the Tenth District remained strong in the third quarter and farm real estate values increased sharply. Farm income and loan repayment rates continued to increase at a steady pace and contributed to multi-year lows in problem loans and asset liquidation. While conditions have improved substantially from recent years throughout the region, the pace of increase in farm income and loan repayment rates was slower in areas most significantly impacted by drought. Alongside a strong agricultural economy and historically low interest rates, the value of all types of farmland was about 15 percent higher than a year ago.
Most lenders have remained optimistic about the outlook for agriculture in the District but have expressed concerns about rising input costs. Despite rising costs, however, elevated commodity prices have continued to support farm finances, particularly for crop producers. Though many risks remain, the agricultural sector will be well positioned heading into 2022 alongside the persistent strength in commodity prices and double-digit gains in land values.
