Farmers have a good first trimester in 2021


Government payments, rebounding commodity prices and improving trading conditions boosted farm incomes for Upper Midwestern farmers in the first quarter of 2021, according to a survey of Upper Midwestern farm lenders by the Federal Reserve Bank of Minneapolis.

“There has been a big increase in farm income over the past six months,” said Joe Mahon, regional director of outreach for the Minneapolis Fed, who presented the report last week. The Federal Reserve’s ninth district covers Minnesota, the Dakotas, Montana, northwestern Wisconsin, and the Upper Peninsula of Michigan.

Courtesy of the Federal Reserve Bank of Minneapolis

BIG BUMP: Land values ​​in the Federal Reserve’s Ninth District are on the rise, according to a recent survey of agricultural lenders. Minnesota saw the largest increase at 10%, comparing the first quarters of 2020 and 2021. Michigan’s upper peninsula was not included in the survey.

Sixty-seven agricultural lenders were polled in April for the survey. Most district bankers – 87% – said farm incomes increased in the first quarter of 2021 compared to the first quarter of 2020.

“The huge government subsidy for farmers along with the increase in crop prices equates to a lot of money here right now,” a Minnesota lender wrote in a comment. “Farmers are spending again.”

More than half of respondents said capital spending on farms is on the rise. Household spending was slightly more stable, with 46% saying it had increased, while 48% said it had remained stable in the first quarter comparisons.

Farmland values ​​and cash rents generally increased in early 2021, continuing the trend of recent surveys, according to the report. Overall, the value of non-irrigated cropland in the Ninth District increased on average by almost 7% compared to the first quarter of 2020. The value of irrigated land decreased slightly, by about 2%.

The district’s average cash rent for rain-fed land has jumped nearly 8 percent from a year ago. Rents for irrigated land and ranches increased by 3% and 6% respectively.

Land values ​​climbed the most in Minnesota, where lenders reported prices for rain-fed land rose 10% from a year ago. Northwestern Wisconsin saw the largest decline in land values, with nearly 15% for the same category of land. The values ​​for North Dakota and South Dakota were more in line with the district averages.

Cash rents on rain-fed land rose the most in Wisconsin, up 24%. In Minnesota, cash rents on rain-fed land increased 7%.

Courtesy of the Federal Reserve Bank of Minneapoliscash rent card

JUST AVERAGE: Minnesota’s average cash rent increase from 2020 to 2021 for rain-fed farmland was similar to that of other states – except for northwestern Wisconsin, which saw the largest increase with almost 24%.

Improving farmers’ finances helped increase the rate of repayment of agricultural loans, while renewals were held up, according to the survey.

“The demand for loans is down significantly,” said a reporter for a Minnesota lender.

“Half of the producers have no operating loan balances at the moment and prepaid expenses for 2021,” another wrote.

Look ahead

Farm lenders were optimistic during the planting season. Across the district, nearly three-quarters of lenders expected farm income to increase in the second quarter of 2021, compared to 4% predicting a decline. Almost 70% foresee an increase in capital expenditure and 57% foresee an increase in agricultural household expenditure.

However, some respondents expressed concern about the recent dry weather in some areas.

One lender from western North Dakota noted: “The severe drought conditions are the biggest problem in our area.”

Learn more about the survey of farm incomes increased in the 9th District of the Federal Reserve.

The Minneapolis Federal Reserve contributed to this report.

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