Impacts from the coronavirus pandemic have depressed market returns to corn and soybean farmers in the Midwest, extending pressures that have existed since 2013 and which were made worse by trade disputes with China. Without large ad hoc Federal aid, income on Midwest grain farms would have been quite low and the ongoing cash flow crunch much worse. Farmland prices have not adjusted downward, in part due to continuing ad hoc Federal aid, but also because interest rates have been historically very low. The financial (solvency) position of Midwest grain farms is surprisingly strong because of the strength in land values. However, the financial condition of Midwest row‐crop agriculture could deteriorate markedly if recent and large infusions of ad hoc Federal aid dissipates or if interest rates rise sharply.

Purpose Agricultural producers rely on debt capital to support many functions of their enterprise, yet private credit markets are frequently characterized by an imbalance between supply and demand. As a result, a number of public lending programs exist to mitigate the perceived market failures of private credit markets that serve agricultural producers. The paper aims to discuss these issues. Design/methodology/approach This study uses a structural disequilibrium model to examine the potential for excess demand or supply in the private market for non-real estate farm loans between 1978 and 2014. Findings The model demonstrates that the market is frequently characterized by disequilibrium, fluctuating between periods of excess demand and excess supply. These disequilibrium periods motivate the discussion of public intervention as a policy proposal within the agricultural sector. Originality/value This study uses traditional disequilibrium modeling to evaluate the private credit market for agriculture lending in a manner that has not been attempted previously in the literature. The model uses maximum likelihood methods with non-linear solution algorithms to investigate excess supply and demand in the sector.

Abstract. This study evaluates the farmland price forecasts provided by the Federal Reserve Bank of Chicago's Land Values and Credit Conditions Survey from 1991: quarter 1 (Q1) through 2016: Q1. Prior studies have demonstrated that similar surveys of agricultural bankers provide accurate predictions of the direction of future farm real estate values through qualitative forecast evaluation. This study extends the existing knowledge base by converting the qualitative responses to quantitative expectations. The quantified expectations are then subjected to additional forecast optimality tests, which suggest that the forecasts are unbiased but inefficient.

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