Farm incomes decreased broadly across the Ninth District and likewise, across all of America, that according to lenders responding to the fourth quarter ag credit survey by the Federal Reserve Bank of Minneapolis. Joe Mahon is a regional outreach director with the Federal Reserve Bank for Minneapolis’ Ninth District.

“Those have been trending down for a couple of years now. The same time, operating costs have maintained themselves at a relatively high level. So those margins have compressed for farmers in our region, and we know that the net effect of that has been pushing down incomes for agricultural producers in our region. In fact, 89% of the lenders that we surveyed in the fourth quarter of 2024 told us that farm incomes were down relative to a year earlier. And we do make these year-over-year comparisons to control for some of the seasonality that obviously happens in farm incomes.”

Likewise, Mahon said capital expenditures also dropped, with 69% of respondents reporting decreased investment in equipment and buildings from a year ago.

“More than two-thirds of them told us that that we saw decreased investment from a year earlier, and that’s probably due to tighter cash, but also the fact that we we’re seeing higher interest rates on borrowing for those kinds of purchases. Well, machinery loans and things of that nature are coming down over the last couple of quarters, but higher than they were a year ago.”

Still, with cash flows weakening, demand for loans increased, while the rate of loan repayment dropped, and loan renewal and extension activity increased.

“Consistent with period of falling farm incomes cash demand for loans has been up from farm borrowers, lenders we surveyed told us fairly overwhelmingly that they saw demand for loans increase in the fourth quarter, and the rate of repayment on those loans went down as well. And I want to clarify that doesn’t necessarily signal a huge amount of stress. You know, these are they might be thinking in terms of advanced repayment things like that, but we’re seeing those kind of move in tandem with farm incomes.”

The district average cash rent for non-irrigated land decreased by almost 2% from a year ago, while irrigated land rents fell nearly 4%.