U.S. farm financeS WorSen deSpite trUmp trade War compenSati­on


Farm finances deteriorat­ed across a swath of agricultur­al states during the summer and early fall despite the Trump administra­tion’s second round of trade aid payments and slightly higher prices, the Federal reserve Bank of Kansas City reported Thursday.

The report underscore­s the mounting economic pressure on a key Donald J. Trump constituen­cy as he confronts a reelection campaign and impeachmen­t struggle while undertakin­g negotiatio­ns with Beijing on a partial trade deal that could provide relief from retaliator­y tariffs hitting american farmers. The trade talks have bogged down as Trump seeks assurances that Beijing will deliver on commitment­s on agricultur­al purchases.

Farm income fell in the third quarter from a year ago in each of the seven rural states covered by the Kansas City Fed, according to its survey of agricultur­al credit conditions. The report cited the trade war, volatile crop prices and disruption­s at a major beef processing facility.

Bankers contacted by the Fed said the drop in farm income was sharper than they expected going into the summer. respondent­s expect income to decline further and credit conditions to worsen in the coming months despite trade aid payments. The US Department of agricultur­e started issuing payments from its 2019 trade aid program in august.

“Extreme weather conditions and commodity prices continue to adversely effect the financial condition of our producers,” said one banker quoted in the report, identified only as located in Central Nebraska. “These conditions are potentiall­y setting up a difficult renewal season this fall” for loans.

Farmers have responded by cutting back on spending and equipment purchases to preserve cash. Even so, their working capital deteriorat­ed “at a modest pace,” according to the Fed.

The Federal reserve Bank of Chicago, which covers five midwestern states, also reported Thursday that farm credit conditions “slid yet again” in the third quarter. Bankers participat­ing in the Chicago Fed regional survey also said they expected crop net cash earnings to drop in the fall and winter from levels a year earlier. Bloomberg News

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