Farm finances remain strong despite rise in inputs, interest rates
An ag economist says the financial outlook for the 2024 crop year remains strong for most of the industry despite tightening margins.
Nathan Kauffman is with the Federal Reserve Bank of Kansas City. “Even though we’re seeing some signs of conditions softening, it’s reasonable to think that the strength of the last few years will provide substantial support in the year ahead.”
He says despite a rise in interest rates, increase input costs and lower commodity prices, producers took advantage of record net farm income. “Producers have done rather well the last few years and have taken a fairly conservative approach to debt to be in a strong position. This won’t be true for every industry. I have alluded to the hog industry where there is some pressure.”
Kauffman says the dairy industry is also facing uncertainty heading into 2024.
He says farm real estate values could be impacted by some of the headwinds. “Both land values and cash rents could decline a bit or soften somewhat.”
Kauffman says lending conditions are slowly changing and concerns over a slowing, global economy could impact US exports.