By Scout Nelson
Farmers across the Upper Midwest faced another difficult quarter as farm incomes declined once again, according to the Federal Reserve Bank of Minneapolis’ Ag Credit Survey. The report, which covers the Fed’s 9th District including Minnesota and the Dakotas, revealed that 81 percent of ag lenders saw lower farm incomes compared to last year’s second quarter.
Regional Outreach Director Joe Mahon said the decline has been a two-year trend. “Prices for those core row crops that they're producing are lower than they were a few years ago,” said Mahon. “And that's translating into lower incomes.”
While favorable weather has boosted production, it has also contributed to abundant supplies, leading to weaker crop prices. Farmers have been selling stored crops from past years, but international competition has further pressured markets.
The financial strain is visible in reduced spending. Nearly 70 percent of lenders reported that farmers are holding back on equipment purchases, often repairing existing machinery or buying used alternatives. Household spending, once steady, is now starting to fall as families adjust to lower income levels.
Credit conditions also show stress. More than one-third of banks said farmers have renewed or extended loans, while over half reported rising loan demand. Repayment rates fell for 43 percent of lenders, signaling increasing challenges for producers.
Farmland values showed mixed results, with ranch, pasture, and irrigated cropland rising by 2 percent, but nonirrigated cropland dipping slightly by 0.1 percent. Mahon noted that land value growth has slowed compared to recent years.
Looking ahead, 74 percent of lenders expect farm incomes to decline further in the third quarter, alongside greater demand for loans. With early signs pointing to potentially record yields in corn and soybeans, Mahon said the upcoming survey will also explore farm labor and the role of trade policy in shaping local markets.
Photo Credit: gettyimages-artqu
Categories: Minnesota, Business