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Long-term interest rates expected to impact farm economy in 2024

Farmers will likely need to manage high interest rates again in 2024.

Economist David Widmar with Ag Economic Insights says long-term rates can have a major impact on the farm economy.

“Like the ten year treasuries that have the biggest impact. Why? Well, there’s a big relationship between farmland values and ten year treasuries. We have a lot of debt, the majority of our debt is farmland or real estate (and) that’s usually a long-term interest rate. And even farm machinery notes are approaching five years in duration, so that’s on the long-term side.”

He tells Brownfield there is correlation between short and long-term rates.

“But the movements aren’t a one-to-one relationship, so we’ve been seeing long-term rates continue higher in the last half of 2023 when the Federal Reserve hasn’t had very many rate hikes to the short-term rates. So we have to keep an eye on that as we head into 2024.”

The Federal Reserve this week kept interest rates unchanged for the third consecutive meeting.

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