By STAN MADDUX

Indiana Correspondent

St. LOUIS, Mo. — The U.S economy has heated up, but farm income in the nation’s heartland has dropped for the 19th consecutive fiscal quarter, according to a new third-quarter report from the St. Louis Federal Reserve Bank, which serves parts of Missouri, Illinois, Indiana, Kentucky, Tennessee, Mississippi and Arkansas.

The report also reveals farm income for 2019 might not get any better, judging from bankers seeming less optimistic about a turnaround in the farm economy soon. The findings were similar in a report just released by the Kansas City Federal Reserve Bank, representing western Missouri, Nebraska, Kansas, Oklahoma, Colorado, Wyoming and northern New Mexico.

According to the Kansas City Fed, the decline in farm income accelerated during the third quarter of 2018 and is expected to weaken further in the coming months.

Tariffs imposed by China leading to a significant drop in U.S. soybean prices since July were cited in both reports as factors in the continued income slide. According to the Kansas City report, more than half of the bankers in its service area reported lower farm income from a year ago, while fewer than 5 percent reported higher income.

The drop was sharpest in states like Missouri and Nebraska with higher concentrations of corn and soybeans.

According to the USDA, net farm income in the United States has dropped by close to 50 percent since 2013, with declines every year except for a slight uptick in 2017. Total net farm income for 2018 is projected at $65.7 billion, a 13 percent drop from 2017.

Dwight Raab, executive director of Illinois Farm Business Farm Management, said the news is not all doom and gloom, though. He called 2018 a “wonderful year’’ for plenty of corn and soybean growers throughout Illinois despite the economic challenges.

Raab said high yields helped make up for low prices, especially on farms running more efficiently nowadays. He said farmers turning a profit are not making as much as they once did but they are keeping their heads above water.

“They’re still making money,” he noted.

The major reason is that farmers are good at everything from maximizing yields and reducing operating costs, to marketing. He said farmers struggling with those skill sets need to be honest with themselves and seek help.

Raab doesn’t know if grain prices will ever get back to the 2013 peak when demand in the U.S. and overseas stretched supplies hurt by a 2012 drought. But even if current prices become what’s normal in the long term, he said there’s still opportunity in agriculture as long as producers “stay on top of things.

‘’I think there’s going to be adequate room for good managers to be able to manage, and manage well, and make a profit – and I think it’s going to put some pressure on some folks who struggle with that,” said Raab.

According to the USDA, U.S. soybean production for the 2018-19 crop year is expected to set a record at 4.7 billion bushels. U.S soybean stockpiles are projected to be at their highest-ever levels at 845 million bushels, according to USDA.

Tariffs from the ongoing trade war with China are blamed for U.S soybean prices reaching a 10-year low over the summer. China, the largest buyer of U.S soybeans prior to the tariffs, has cut its soy purchases from the U.S. by more than 90 percent from a year ago.

Raab said also that rising interest rates, after being so low for so long, is not helping tough economic times on the farm. “Those things will put pressures on farmers, too,” he explained.

Higher interest rates come at a time when lenders are more reluctant to extend credit to struggling farmers. According to the St. Louis Fed, agricultural bankers in the second quarter of 2018 reported elevated demand for farm loans and modest increases in problems with loan repayment.

Kenny Burdine, an extension specialist with the University of Kentucky, said the beef industry in his state is struggling from a 30 percent or so decline in prices since 2014 and 2015, when profits were high. A 550-pound steer calf selling for well over $2 a pound then is now going for about $1.45, he explained.

Burdine cited overproduction along with competition from pork and poultry as major factors. He also said the price of beef has been lower in the past, but the recent drop has eaten into profits enough for little to be left for investing back into operations.

He expects the struggles in the cattle industry in Kentucky to continue for a couple more years. “All indications point to more production next year. I also think we’ll see more production in pork and poultry, so that’s going to pressure price some,” he said.