According to a survey of lenders, agricultural credit conditions in the Tenth Federal Reserve District tightened in Q2 2024. Lower crop prices, high production costs and declining farm incomes are the leading causes.

Despite strong cattle prices, over 60% of lenders reported a year-over-year drop in farm borrower financial condition. The index of farm income was lower in crop-heavy states like Kansas, Missouri, and Nebraska. Over 70% of banks noted lower borrower liquidity.

Loan demand rose sharply, but repayment rates and loan performance weakened. Interest rates remained high, and farmland values grew slowly. Lenders expressed concerns over ongoing financial pressures, inflation, and the impact of high interest rates on farm operations.

Stronger prices and profit margins for cattle could be creating relatively stronger markets for ranchland in the region. About 80% of agricultural lenders expect land values to remain unchanged in the next quarter.

Read more from the survey of agricultural lenders here.