Tighter profit margins for crop producers were a drag on farm income in the Federal Reserve Bank’s Tenth District during the first quarter of 2014, reports the Federal Reserve Bank of Kansas City’s quarterly Survey of Agricultural Credit Conditions. However, the livestock sector showed improved profitability.
The Tenth District includes Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.
Low corn and soybean prices combined with relatively high input costs tempered farm income and cropland values as spring planting approached. In addition, winter wheat growers were concerned that poor yields would limit profits despite a rally in wheat prices.
With lower income, more crop producers borrowed to pay for operating expenses and bankers reported an uptick in carry-over debt compared with last year. Looking ahead, 40 percent of the bankers surveyed expected 2014 farm income would fall short of 2013 levels.
In contrast, high cattle and hog prices coupled with lower feed costs improved profit margins for cattle and hog operators, bolstering farm income for livestock producers.
Recent movements in Tenth District farmland values echo farm income trends. Expectations of lower profits for crop producers have generally halted the rise in cropland prices. In contrast, strong demand for high-quality grazing pastures bolstered ranchland values, which increased 2.6 percent from the fourth quarter of 2013.
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