Oklahoma’s farm economy isn’t as strong as those in surrounding states and will likely slip in the coming months, according to a new report by the Oklahoma City Branch of the Federal Reserve of Kansas City.
The branch issued its latest issue of the quarterly publication the Oklahoma Economist, titled “Oklahoma Ag Economy Diverges from Surrounding States.”
The farm economy in Oklahoma generally has remained solid, although it has diverged negatively from surrounding states in the Tenth Federal Reserve District, according to Cortney Cowley, senior economist at the Oklahoma City Branch of the Federal Reserve Bank of Kansas City.
“Expectations for farm income and agricultural credit conditions have softened more than in other states, particularly in wheat- and cattle- producing areas affected by extreme drought,” she said. “The state received more rain in recent weeks, which could improve prospects for cattle, corn and soybean production but was too late to benefit the wheat crop.
Despite general strength overall, the outlook for the Oklahoma ag economy has diverged somewhat from other states in the Tenth District. In the first quarter, only 23% of bankers in Oklahoma expected an increase in farm income in the next three months, while almost 50% expected a decline. Expectations for farm income softened slightly in other states as well.
However, in contrast to Oklahoma, about 67% of bankers in Kansas, Missouri and Nebraska and more than 55% of bankers in the Mountain States of Colorado, New Mexico and Wyoming expected an increase in farm income in coming months.
Agricultural credit conditions also were expected to deteriorate a bit more in Oklahoma than in other states. Repayment rates were expected to weaken in coming months across all regions of the Tenth District, but Oklahoma was the only state where a larger share of bankers expected repayment rates to be lower than a year ago.
In addition, demand for credit remained elevated in Oklahoma in 2021 and was expected to continue to increase at a faster pace than in surrounding states in the second quarter of 2022. Although farm liquidity had strengthened coming into 2022, External Linkhigher production expenses may have begun to put more pressure on farm income, elevating farm borrower financing needs.