(MINNEAPOLIS, MN)– Farm incomes “overwhelmingly fell” in the third quarter of 2024, according to an October survey of agricultural bankers by the Federal Reserve Bank of Minneapolis.
Bankers were nearly unified in their assessment that farm incomes were down according to the Ninth District Fed survey. 85 percent of agricultural lenders in the district said incomes were down in the third quarter, compared to 76% in the previous quarter. Also, 67% of respondents say that capital expenditures dropped with decreased investment in equipment, buildings and more from a year ago.
Joe Mahon, Regional Outreach Director for the Minneapolis Fed, said on Monday’s episode of Agriculture of America (AOA) that “I think the overwhelming result here is that we’re perceiving further decline in farm incomes on a year-over-year basis in the third quarter.” Mahon added that weak commodity prices and high cost of inputs are starting to bite.
In terms of loan demand from borrowers, Mahon says the survey of bankers indicated we could see demand grow as we close out the year. “Just about half of the lenders told us they saw an increase in loan demand over the previous three months,” says Mahon. “That’s sort of what we would expect to see and we asked them to look forward to the quarter ahead, so through the end of 2024, and nearly two-thirds of 61% of them told us that they expect loan demand to increase further in the fourth quarter of this year.”
Mahon did add that, in a bit of positive or neutral news, most lenders said they have seen no change in repayment rates. He also talked about land values and cash rents saying that land values plateauing “is not an unfair characterization.” However, he is surprised by some of the increase in cash rental rates.
“One sort of maybe surprising bit of news is that we saw a bigger increase in cash rents in the district, 5% increase in rents for non-irrigated farmland year-over-year throughout our region, which has been, you know, not what we’ve typically seen over the last couple of years where land values have been going up faster than rents,” says Mahon.
The Ninth Federal Reserve District out of Minneapolis covers the states of Minnesota, North Dakota, South Dakota and Montana along with portions of Wisconsin and the Upper Peninsula of Michigan.
View the full results of the third quarter survey here: https://www.minneapolisfed.org/article/2024/despite-generally-good-harvests-farm-incomes-declined
And hear the full segment with Joe Mahon on Monday’s episode of AOA at the podcast link below, starting at the 21:30 mark of the podcast:
