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K.C. Fed survey shows rise in farm financial stress

The Federal Reserve Bank of Kansas City says a slow but steady rise in financial stress in the farm sector continued in the third quarter of this year.

The latest survey of bankers in the Fed’s Tenth District indicates producers are expending more working capital to meet short-term financial obligations. Nearly 30 percent of bankers reported a significant deterioration in working capital from a year ago, about twice the number at the same time in 2015.

Bankers also report a significant decline in farmland values. The value of each type of farmland—non-irrigated cropland, irrigated cropland and ranchland—fell more than six percent from a year ago. The decrease in the third quarter was the sharpest year-over-year reduction in the value of each type of farmland throughout the Tenth District since the mid-1980s.

Similar to farmland values, cash rental rates for both cropland and ranchland decreased in the third quarter, following a recent trend of sharper declines.

The Tenth District consists of Nebraska, Kansas, Oklahoma, Colorado, Wyoming, the northern part of New Mexico and the western part of Missouri.