Guarded Optimism in the Minneapolis Fed’s Ag Survey

Sixty-two percent of ag lenders across the Minneapolis Fed District say that farm incomes across the district decreased through the second quarter of 2019 when compared to last year. Only eight percent say that farm incomes have increased. Capital spending was also down in the second quarter, with 64 percent of lenders reporting spending had dropped, while just five percent say it increased. A Wisconsin banker wrote in the survey that, “Crops are behind, and we will need warmer weather and an extended fall for our crops. Yields have been affected and will be lower in our area.” However, that same banker did say with improved crop prices, farmers are in a better position than they’ve been in for the last three years. The survey also shows that falling farm incomes have pushed loan repayment rates down slightly, while renewals and extensions increased. Respondents did note that cropland values did increase slightly. While the third-quarter outlook is for continued contraction in the ag sector, fewer survey respondents predicted decreasing income, capital expenditures, and household spending over the next three months than they did in the last three months. States in the Minneapolis Fed District include Minnesota, Montana, North and South Dakota, northwest Wisconsin, and the Upper Peninsula of Michigan.