KC Fed’s Nate Kauffman: Strengths and strains in farm economy right now

Listen and subscribe on Apple Podcasts | Spotify | YouTube

No doubt that some farmers are feeling serious financial pressure now. But much of the overall agricultural sector can handle this if some of that pressure is not long-lasting, Federal Reserve Bank of Kansas City Senior Vice President Nate Kauffman believes.

Kaufmann, who has worked for the Kansas City Fed for more than 14 years, is also the Center for Agriculture and the Economy Executive Director. His role demands a deep level analysis of data and trends, and he knows that surging energy and fertilizer prices strain producers who are already dealing with commodity prices that struggle to cover the cost of production.

“…some segments of the industry that are still okay,” Kauffman told American Farmland Owner from his office in Omaha, Nebraska.

“If what we're focused on is the heart of the Midwest, and thinking about corn and soybean production as an example,” Kauffman said, that could be another matter.

Heavy reliance on corn and soybeans in the Midwest puts the region at more risk for exposure to some of the negative factors right now. “From what we can tell, there's about 15-20% of the industry specific here to thinking about corn and soybeans again, that is probably facing some real pressure,” Kauffman said.

Nate Kauffman bio:

• Federal Reserve Bank of Kansas City --Senior Vice President and Omaha Branch Executive

• Federal Reserve Bank of Kansas City -- Center for Agriculture and the Economy Executive Director

• Federal Reserve Bank of Kansas City – Former Vice President and Omaha Branch Executive

• Federal Reserve Bank of Kansas City – Former economist

Commodity Price Increase for Corn and Soybeans

A slight increase in commodity prices has lessened some of the economic weight, Kauffman said. “It's worth noting that actually prices have come up some…there is a little bit of correlation that you see in ag commodities with some of the other commodity space, and energy has that… tends to have that effect. So, there have been some selling opportunities a little bit.”

Some of Kauffman’s perspective on this is because he focuses not just on the moment – which can be difficult for others because of rising fuel and fertilizer costs – but also on the longer-term view.

“There is a large segment of the industry that has really been pretty stable, and there's a number of reasons for that,” Kauffman said as he reflected on the post-COVID rapid economic surge in the United States. ‘We could talk about the really strong income years of 2021, 2022,”

RELATED: This is what the Kansas City Federal Reserve found in the declining farm values in the country’s Tenth District in the first quarter of 2025. 

Resilient Farmland Values

Kauffman said it is also important to point out the resilience of farmland values when looking at the overall health of the agricultural sector. “We could talk about record or near-record land values. And for those that have equity built up in that real estate, that matters a lot. So, there has been a lot of capacity to be able to withstand some of this short-term pressure. And then, of course, you have the government payments that are added to that.”

Kauffman said that he doesn’t want to push aside difficulties that some farmers are facing right now. But he still sees strength overall. “…not to diminish the challenges, because they're there,” he said.

“Yes, there are concerns about here and now, and of course, with the sharp reduction in profitability,” Kauffman continued. “But I think a lot of the concern is, what does this look like in 3 years? Because we can't yet see what this looks in any way that's substantively different from where we're at right now.”