Report: Oklahoma Farmers And Ranchers Showing Early Signs Of Financial Pressure

Oklahoma farmers and ranchers are tightening their belts amid sharp declines in farm income and steadily rising cost of doing business, according to a new report. 

In its quarterly agriculture credit survey, the Kansas City branch of the Federal Reserve found early signs of economic pressure. For Randy Zabel, owner of Zabel Cattle Company, he says the pressure is real.

“Our cost are still very high and we don’t see a real return to those lower levels,” Zable said.

Two years ago, Randy his wife and three sons took over the1,300 acre family farm off the Canadian river near Hydro.

“Our cost of doing business significantly increased and some of the end costs like all the preventative medical care, fuel prices were through the roof, fertilizer prices went up nearly double,” Zabel said.

The new quarterly credit survey shows while the cost of farming and ranching remains high, 3 in 10 Oklahoma bankers are reporting lower farm income compared to a year ago. 

“In the first half of this year and the second half of last year we started to see commodity prices start to come down, farmers starting to burn through liquidity a little faster because of really sticky or high production expenses,” Kansas City Federal Reserve Senior Economist Cortney Cowley said,

While the Zabel’s operation has been around since 1948, Randy said he worries about others new to the industry taking out loans to fund their operation.

“With interest rates and high prices you think ‘I can manage that,’ but that interest, with cost of operation, and a downturn in price and you will lose everything very quickly,” Zabel said.

“As farm incomes come down, expenses stay high and agriculture producers need more credit to pay for those expenses, so we’re starting to see loan demand increase,” Cowley said.

That increase in demand comes as the ag credit survey shows signs farmers are having a slightly harder time repaying their loans compared to this time last year. 

“Even though we are seeing some weakness on the loan repayment side, loans are not going delinquent, not defaulting, there’s still a lot of strength from that perspective,” Cowley said,

Despite some cautionary economic indicators Randy said at the end of the day he’s looking to expand his herd, continuing four generations of farming and ranching.

“It has been great for my wife and I to raise our sons, and that every summer they work with grandpa driving grain carts, working cattle, building fence, tearing down fence, and that aspect of it is beyond words to describe how beneficial that is to our family,” Zabel said.

Economists said in the report, they do expect more pressure on the agriculture economy over the next 6 months.