Agricultural loan conditions in the Kansas City Fed’s Tenth District saw a slight easing during the third quarter of 2023, despite two years of significant improvement. This was due to lower farm income and repayment rates for the second quarter in a row. The moderation was more pronounced in areas affected by drought, but less so in those concentrated on livestock production. Despite this, agricultural real estate values have remained firm, defying expectations given higher interest rates and easing finances.

The agricultural economy has softened in recent quarters along with commodity price moderation. Additionally, increased production costs and falling prices for many key commodities over the past year are likely to reduce farm income in 2023. Despite these challenges, loan performance has remained solid with continued support from strong financials over the past two years.

By Editor

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