The effects of the COVID-19 pandemic continued to pressure the agricultural economy and weighed on farm finances in the Tenth District. Farm income declined in the second quarter at the quickest pace since 2016, and weaknesses in both income and borrower liquidity were expected to carry into the coming months. Agricultural credit conditions remained weak overall, but relatively stable. Looking to the coming months, however, bankers expected farm borrowers to have greater difficulty repaying loans. Some of the current stability in credit conditions may be attributed to government programs that provided revenue support and additional financing options for borrowers.

Farm income and Borrower Finances

Alongside disruptions related to COVID-19, farm income declined at a considerably faster pace in the second quarter. Weak market conditions for key agricultural commodities limited profit opportunities, and farm income in the District dropped at the fastest rate since 2016 (Chart 1). Looking to the next quarter, declines in income were expected to persist. The deterioration in income during the second quarter and expectations about the coming months generally were consistent across all states in the region.