Contact: Rosie Cataldo 612-204-5261 Date: June 28, 2000 FOR IMMEDIATE RELEASE

Minneapolis Fed Survey Reports Ag Economy
on the Upswing

MINNEAPOLIS—The mild spring weather, high livestock prices and government payments contributed to improved financial conditions for Ninth District farmers and ranchers, according to the Minneapolis Fed's second quarter survey of agricultural lenders.

“Farm income, household spending and capital spending have improved significantly from a year ago. Also, agricultural producers are making more loan repayments, and fewer are extending loans,” writes Minneapolis Fed regional economist Tobias Madden in the July fedgazette.

Findings on capital spending and farm income:

• Farm income and spending improved from the previous planting and calving season, especially in South Dakota, primarily due to higher cattle prices.

• Over three-fourths of South Dakota lenders indicate average or above average farm income, a 57 percentage point increase from last spring's survey.

• Two-fifths of Montana lenders report normal or above-normal capital spending over the last three months; a year ago Montana lenders reported little capital spending.

• Only 18 percent of Minnesota lenders reported above-normal levels of loan renewals or extensions compared with 55 percent one year ago.

Findings on farm loan volumes, interest rates and land prices:

• Farm loan volumes increased slightly from the second quarter 1999 survey. Operating loan volume, except for feeder loans, increased as 94 percent of lenders report normal or above normal demand.

• High livestock prices caused demand for feeder livestock loans to rise, with 18 percent of lenders indicating above-normal levels in the second quarter compared with 7 percent in the second quarter of 1999.

• Cropland prices increased from an average of 5 percent in North Dakota to 9 percent in Wisconsin over last spring's prices. Pasture land price increases ranged from an average of 3 percent in North Dakota to 10 percent in Wisconsin compared with last year.

• Interest rates for farm loans have increased about 75 basis points from the second quarter of 1999.

The Federal Reserve Bank of Minneapolis quarterly survey of 111 agricultural bankers in the Ninth Federal Reserve District included Montana, North and South Dakota and Minnesota. The Upper Peninsula of Michigan is not part of the survey.

As one of the 12 Federal Reserve Banks, the Federal Reserve Bank of Minneapolis contributes to a variety of Federal Reserve System functions, including operation of a nationwide payments system, distribution of the nation’s currency and coin, supervision and regulation of member banks and bank holding companies, and serving as a fiscal agent for the U.S. Treasury. Additionally, the president of Minneapolis Fed serves as a member of the Federal Open Market Committee, the monetary policymaking arm of the Federal Reserve’s Board of Governors. Together with its branch in Helena, Mont., the Minneapolis Fed serves the Ninth Federal Reserve District, which includes Minnesota, Montana, North and South Dakota, 26 counties in northwestern Wisconsin and the Upper Peninsula of Michigan.

State Fact Sheet: Agricultural Credit Conditions Survey

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