Ag Credit Conditions Stay Strong While Outlook Softens

Farmland values continue to increase at a rapid pace through the end of 2021. 

Alongside sustained strength in farm income and credit conditions, the Kansas City Fed says the value of all types of farmland was over 20 percent higher than last year. 

The recent strength in agricultural real estate markets has been supported by strong demand, historically-low interest rates, and vastly-improved conditions in the farm economy. 

Lenders say the outlook is mostly-favorable for agriculture in the Tenth District, but rising input costs are a risk to the sector. The possibility of weaker ag income and higher interest rates in the economy remain risks for farmland markets. 

Even with the uncertainty around input costs, lenders expect favorable conditions in the economy to support farm finances and lead to more gains in farmland values during 2022. 

Despite risks, the Fed says ag appears to be well-positioned in the year ahead.

(Story Courtesy of the NAFB News Service)