WASHINGTON, May 15, 2013 –After record high farm incomes in recent years, a new survey indicates that farm income growth started to slow in the first quarter of 2013. At the same time, land values continued to climb – albeit at a slightly slower pace
The Federal Reserve Bank of Kansas City’s quarterly Survey of Agricultural Credit Conditions indicates that rising production costs and falling crop prices curbed farm income growth. At the same time, high feed and forage costs continued to stifle profitability in the livestock sector, where losses were compounded by declines in livestock prices and the persistence of intense drought.
“Crop prices were expected to fall throughout the growing season and wheat harvest, potentially restoring livestock and ethanol sector profits but restraining farm income from crop sales,” noted the report’s author Nathan Kauffman.
Even though farm income remained relatively high, bankers expected farm income to weaken over the next quarter.
“Wheat prices fell in the first quarter, which could keep farm income in the District subdued through this year’s spring harvest. Futures markets also suggest that corn and soybean prices may drop if normal weather patterns return, boosting U.S. crop supplies,” noted Kauffman. “Still, despite the potential for falling prices, crop insurance prices for corn and soybeans were set at levels that should ensure strong income for many crop producers in 2013.”
Land values in the seven-state Tenth Federal Reserve District climbed further in the first quarter. Cropland values rose 20 percent and ranchland values rose 14 percent year-over-year –marking aa modest slowdown compared with the first quarter of 2012. Rising land values strengthened the balance sheet of farmers who own land but boosted debt levels for others financing farmland purchases, the report noted.
The complete survey is available at www.KansasCityFed.org/agcrsurv/agcrmain.htm.
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