State summaries of Ag Conditions/Farm Income Spending

Fourth Quarter 1996 Agricultural Credit Conditions Survey

Published January 1, 1997  | January 1997 issue


Conditions continue favorable for Minnesota farmers. Estimates of farm income, and household and capital spending continue well above normal levels and above those in other district states. Loan repayments are running above normal, and extensions, renewals and referrals below normal. No banker had refused a loan for lack of available funds, and the 22 percent of borrowers at their debt limits is less than half that in Montana. Machinery loan levels increased from the previous quarter and are expected to strengthen into 1997. Crop land prices have increased over 7 percent compared to a year ago.


Business conditions for cattle ranchers remain difficult, and continue to skew the picture for Montana agriculture as a whole. Farm income estimates are essentially unchanged, and household spending shows some increase, largely in crop areas. The decrease in capital spending may reflect farmers' reaction to higher wheat prices earlier in the year, when they purchased combines and other grain equipment prior to harvest. While current returns in cattle ranching remain low, the trough of the cycle may have passed, and better-capitalized ranchers may be readying for price recoveries in 1997 and 1998, which may explain the increase in grazing land prices.

Income and spending apparently worsened in North Dakota from the third to fourth quarters. The sharp decline in wheat and barley prices from late summer into the fall apparently has taken the bloom off the rose of earlier optimism. Rates of loan repayment dropped precipitously, with 60 percent of bankers putting this in the "below normal" or "low" categories. Some farmers apparently did pay down their loans as average loan-to-deposit ratios dropped more than 6 percentage points. But the proportion of borrowers at their debt limits increased from 25 percent to 31 percent.

South Dakota

The financial situation brightened for South Dakota farmers as the later crops came in, but continuing pressure on cattle ranchers continues to weigh on many indicators for the state as a whole. Farm income and household spending are near normal levels, and 28 percent of bankers report above-normal loan repayment rates. Loan-to-deposit ratios increased slightly to 72 percent. Feeder loan volumes are still well below normal, but increased modestly from the preceding quarter. Estimates of machinery loan volumes also rose slightly, though overall farm capital spending is still below normal.


Drops in milk prices made banner headlines in Wisconsin, but most Wisconsin bankers are optimistic about financial conditions for their farm customers. Ample loanable funds are available, half of the bankers report that repayment rates are above normal, referrals to other lenders are down, and only 15 percent of farm borrowers are at their debt limits, the lowest level in the district. Land values are up about 3 percent for both crop and pasture land.

Return to: Corn belt prosperous, but cattle sector still stressed, bankers say