Economic issues affecting agriculture and the financial condition and performance of the Farm Credit System as of March 31, 2018, was reviewed recently by the Farm Credit Administration board.
How are prices doing?
For corn and soybean producers, prices are projected to strengthen, boosting profit margins. For livestock producers, profit margins are expected to decline as rising grain prices drive up feed costs and Southwest pasture conditions deteriorate because of severe drought.
Producers across the farm economy will face stress on cash flows from rising interest rates and higher fuel costs. Higher interest rates and declining cash rents will put downward pressure on farmland values.
In addition, uncertainties regarding agricultural trade policy and the Farm Bill will have a direct bearing on the farm economy.
What about earnings?
For the first quarter of 2018, the Farm Credit System reported strong earnings, higher capital levels, and favorable portfolio credit quality. Overall, it is financially strong and remains safe and sound.
The board also received the semiannual report on Office of Examination operations. During the first six months of fiscal year 2018, FCA examiners conducted onsite activities at all four system funding banks, 45 associations, and 7 service entities.
Source: Farm Credit Administration