OMAHA, Neb. (AP) — Farm income should improve in some Midwest and Western states during the second quarter because livestock businesses will benefit from lower feed costs, the Federal Reserve Bank of Kansas City said Friday.
The Fed's survey of banks in the 10th District says total farm income fell slightly in the first quarter as crop prices declined, so that is expected to reduce farmers' income this year.
The 10th Federal Reserve District, based in Kansas City, Mo., covers Kansas, Nebraska, Oklahoma, Wyoming, Colorado, northern New Mexico and western Missouri.
Crop prices declined over the past few months because of predictions of increased corn and soybean plantings and expectations for a better-than-average winter wheat harvest on 53.8 million acres. The USDA has said farmers are planning to plant 78.1 million acres of soybeans and 88.8 million acres of corn in 2010.
Bankers who answered the survey expect overall farm income to improve slightly in the second quarter but remain below last year.
The Fed said farmland values increased about 2 percent across the district during the first three months of 2010 because demand remained strong. Most of the land buyers were farmers, but some buyers were investors.
The biggest gains in farm and ranch land values were reported in Nebraska. Compared to a year ago, prices for nonirrigated farmland in Nebraska increased 6.2 percent, irrigated farmland increased 4.6 percent and ranchland increased 6.1 percent.
The Fed said farm credit conditions held steady in the first quarter with interest rates on operating loans remaining at historically low levels just below 7 percent on average. Banks in the district reported having significantly more funds available for farm loans than they needed to meet demand.
The Federal Reserve's quarterly report is based on a survey of 267 lenders.
