Agricultural Activity ‘Flat to Down Modestly’ This Fall, Says Beige Book

The farm economy stabilized in the Midwest and northern Plains but weakened in much of the country this fall as producers nationwide confronted high costs and lower commodity prices, said the Federal Reserve’s Beige Book on Wednesday. “Agricultural activity was flat to down modestly, with some crop prices remaining unprofitably low,” said the national economic summary.

The Beige Book, which is based on reports from regional Federal Reserve banks, is published a couple of weeks ahead of the periodic meetings of the Fed committee that sets interest rates. The next meeting will be on Nov. 6 and 7, immediately after the U.S. elections. The new edition of the Beige Book covered developments since early September.

“Inflation continued to moderate, with selling prices reportedly increasing at a slight or modest pace in most districts,” said the Beige Book. “Still, the prices of some food products, such as eggs and dairy, were reported to have increased more sharply.”

Regional Fed banks in Chicago and Minneapolis said agricultural conditions have stabilized, though not at ideal levels. Low harvest weights for corn and soybeans were cutting into revenue potential from the crops, said the Chicago Fed, in the heart of the Midwest. “There were reports of agriculture equipment and input sellers offering low- or even zero-interest loans to spur sales.” The Minneapolis Fed said agricultural conditions were “stable at low levels” in the northern Plains.

“Activity in the agricultural sector within the Tenth District continued to decline at a moderate pace as crop prices remained weak,” said the Kansas City Fed in the central Plains. “Financial conditions were more stable in areas most concentrated in cattle production as profit opportunities for cow/calf producers remained strong.” Drought was an increasing challenge to crops and cattle in the Southwest, said the Dallas Fed. “Above-average production is needed for producers to cover costs, and that largely hasn’t materialized due to dryness in some areas and hurricane damage in others.”

Although agricultural production was stable in the mid-South, “overall sector conditions have weakened,” said the St. Louis Fed. “Input prices remained high and commodity prices were low.” The Atlanta Fed said conditions had declined modestly. “Farmers in south Georgia and parts of Florida reported significant damage and losses resulting from Hurricane Helene.” The Atlanta and San Francisco feds said demand for timber was low.

According to the USDA, net farm income, a measure of profitability, will drop to $140 billion this year, well below the record $182 billion of 2022 but still the fourth-highest total on record. Corn and soybeans, the two most widely grown crops, were forecast to see the largest declines in crop revenue this year, the result of lower market prices. The largest U.S. farm group said the forecast decline of farm income was evidence of an agricultural downturn.

The Beige Book is available here.