FarmPolicy

August 27, 2014

2012 Drought Implications- Kansas City Federal Reserve Credit Report

Following on a report from earlier this month assessing some of the early impacts of this year’s drought, yesterday, the Kansas City Federal Reserve Bank published its quarterly Survey of Tenth District Agricultural Credit Conditions.

In part, yesterday’s report indicated that, “After early spring rains, emerging drought conditions wilted District farm income expectations during the second quarter. At the beginning of the quarter, precipitation in the southern portions of the District led to a rebound in winter wheat production and farm incomes. Yet, by the end of the quarter, intensifying drought conditions were cutting bankers’ expectations for farm income during the third quarter.

“Bankers reported that livestock producers were bearing the biggest burden from the drought. Higher feed costs and lower cattle prices from forced herd liquidations were cutting livestock profits. Several survey respondents noted that high crop prices would support crop incomes for producers able to harvest a crop and those that have crop insurance.”

(See related chart below, click on the chart for full view).

One of the author’s of yesterday’s Kansas City Fed report, Jason Henderson, was a guest on today’s AgriTalk radio program with Mike Adams.

In part, their conversation focused on farm income and issues associated with future production costs potentially resulting from this year’s drought.

Yesterday’s credit survey also discussed farmland values, stating that, “After surging at the beginning of the year, District farmland values rose less rapidly during the second quarter. District farmland values rose less than 3 percent during the second quarter, roughly half the rate of growth experienced at the beginning of the year. Nonirrigated cropland values rose solidly, while irrigated cropland values held steady and ranchland values edged up. The index of future farmland value gains declined sharply as more than three-quarters of survey respondents felt that farmland values would hold steady through the fall.”

(See related charts below, click on the chart for full view)

On AgriTalk today, Mike Adams and Dr. Henderson also discusses issues associated with farmland values:

-kg

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