While farmland values continue to soar, more data shows that profitability is shrinking upon tighter margins. However, according to quarterly reports from four Federal Reserve Banks on farm income, land values and agricultural credit conditions, the farm economy remains strong. This is the case even as increasing interest rates, drought, high inputs and market price pullbacks have pointed themselves toward a slowdown in the farm economy in the coming months.

Despite the headwinds, ag prices have remained strong year-over-year in year two, maintaining the uptick that began in 2020. USDA’s June index of prices increased 26% from last year and 53% from two years ago. June corn and soybeans were up 23% and 13%, respectively, from the same time last year. While the ag sector has remained largely positive in 2022, concerns still loom for the ag economy in 2023.

Read more on the farm economy and 2023 projections here.