Farm Income Declines in Northern Plains, Say Ag Bankers

The two-year decline in commodity prices drove down farm income in the northern Plains this summer, ag bankers said overwhelmingly in a survey by the Minneapolis Federal Reserve Bank, and they expect income to fall again this winter. Farmers have cut back on major purchases, the bankers said, and loan demand is up.

Regional Fed banks in Chicago and Kansas City have also reported lower farm income in their districts. Nationwide, ag bankers say the volume of new operating loans was 40% higher than in the third quarter of 2023. Farm-state lawmakers say the disaster aid package being assembled by Congress should include payments to buffer the impact of lower market prices.

Nine of every 10 bankers taking part in the Minneapolis Fed survey said farm income during July, August, and September was lower than in the same period in 2023. And 83% said they expected lower farm income in the final three months of this year. The Minneapolis Fed’s district covers Minnesota, Montana, North Dakota, South Dakota, the northern third of Wisconsin, and the Upper Peninsula of Michigan.

“Capital spending is down significantly, with most farmers not purchasing or trading machinery at this time,” said a South Dakota banker. Looking ahead, a Montana banker said that with high input costs and land rental rates, “2025 cash flows will be very tight and most likely net losses.”

Nonetheless, farmland values in the northern Plains were up, continuing a four-year trend, said the bankers. Non-irrigated cropland values were 2% higher than a year earlier, irrigated cropland was up 3%, and ranchland and pastureland were up 1%.

In the central Plains, bankers told the Kansas City Fed that non-irrigated cropland values were up 5% from the third quarter of 2023. In the Chicago Fed district, which includes Iowa and most of Illinois, Indiana, Wisconsin, and Michigan, farmland values were unchanged. “This was the first period without a year-over-year increase in District farmland values since the fourth quarter of 2019,” said the Chicago Fed.