The Farm Credit Administration board received a quarterly report on economic issues affecting agriculture recently. According to the report, inflation remains elevated in certain sectors of the economy despite interest rate hikes and supply chain improvements.
For agriculture, drought has declined substantially across the western half of the country, and good spring weather conditions sped up planting progress for many crops. For several states in the Great Plains and Southwest, drought conditions will need to continue to be monitored. With strong prospects for large crops and the building of grain stocks in 2023, prices have weakened. While many input costs also have fallen, crop producers are likely facing tighter margins this year.
Because of rising interest rates and seasonal lending fluctuations, Farm Credit System growth was slower in the first quarter of 2023 than it was for the same quarter the previous three years. The loan portfolio continued to perform well, but nonperforming assets increased. Despite the increase, the overall level of nonperforming assets remained low, at 0.53 percent of loans outstanding and other property owned.
