Despite a weaker outlook for farm income due to this summer’s drought, farmers in the western Corn Belt and High Plains are not expected to have any trouble paying back loans.
A new survey of bankers in the Federal Reserve Bank’s Tenth District—the Kansas City district—indicates loan repayment rates in the third quarter of 2012 are expected to be close to last year’s levels. Several bankers commented that high crop prices would support crop incomes for producers able to harvest a crop and those that have crop insurance.
Nebraska governor Dave Heineman tells Brownfield that while the drought has been tough on the state’s farmers and ranchers, the ag industry is still in a strong position financially.
“Compared to last year, obviously, incomes are likely to be down,” Heineman says, “but it still may be an overall year that we still have a decently strong ag economy because of the financial stability of the ag industry in this state.
“Our farmers and ranchers understand that, every once in a while, you’re going to run in to a year like this,” Heineman continues, “but I think they’re so much stronger today than, say, a decade ago.
“They can weather this storm—we certainly hope so.”
Livestock producers are bearing the biggest burden from the drought. Bankers in the Fed survey reported higher feed costs and lower cattle prices from forced herd liquidations have cut livestock profits.
The Fed’s Tenth District includes Nebraska, Kansas, Wyoming, Montana, Colorado, Oklahoma and western Missouri.