Net farm income hit a high in 2022. It dropped off 26 percent this past year. Federal Reserve Bank of Kansas City Senior Vice President Nathan Kauffman said profits will also be thinner this year. “Despite this expected decline in farm income, I would argue many producers are still in a very, very strong financial position,” said Kauffman. “Much of this has to do with storing up working capital in these past couple of years when incomes were very strong. We interact a lot with bankers and lenders and in our conversations last year we would have banks tell us they would have no borrowers on a ‘watch’ list; that’s not common to have no borrowers on a ‘watch’ list as it relates to potential risk.” If farm income declines again in 2025 with a similar decline in working capital, Kauffman said agriculture will be in a situation very similar to the period between 2016 and 2019. “And we know those were not strong years in ag.”
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