Ag lenders say farm incomes fell across most of the country last quarter. The Minneapolis Fed says it has been a pattern.
“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,” said Joe Mahon.
Mahon says capital expenditures also dropped, falling nearly 70 percent on the year, and that includes big buys like machiner, which is another industry taking a hit.
“The equipment market has been pretty soft for the last year, really reflecting the overall ag economy and some of that uncertainty that comes with the overall economy. There have been some storm clouds on the horizon, whether that is related to weather, related to commodity markets, related to geopolitical issues, or even just the lack of a farm bill, and all these things lead to uncertainty. Unlike inputs that have to be purchased year after year, like seed or crop protection chemicals, tractors sometimes can get delayed, and so, we’re seeing that reflected in the market right now. It’s that reflection of uncertainty,” said AEM’s Curt Blades.
Blades says the equipment industry started the year trending down, but he notes January is always a slow month for sales. He is holding out hope that as planting season approaces, more farmers may begin feeling optimistic again, leading to more capital purchases.
