Heartened by sharp increases in commodity prices, farmers and ranchers across the Midwest and Plains are paying off bank loans and opening their wallets for big-ticket purchases, said a report from the Federal Reserve on Wednesday based on surveys of ag lenders. “Dramatic improvements in crop prices drove the sharpest turnaround in agricultural lending conditions in more than a decade.”

Based on conditions at the close of 2020, “farm income was higher than a year ago across all participating districts,” said the Fed. The regional Federal Reserve banks in Chicago, Dallas, Minneapolis, Kansas City, and St. Louis conducted surveys of farm bankers in their regions. “With better financial outcomes in 2020, capital spending plans for farm borrowers also strengthened in the fourth quarter and were expected to increase in all districts in coming months.”

Amid the brightening prospects, continued weakness in cattle markets and harsh weather “still left some headwinds for some producers,” wrote economist Cortney Cowley and assistant economist Ty Kreitman of the Kansas City Fed, which produced the report.

Values for non-irrigated farmland increased on most states. The largest increases were 9% in northern Indiana and 8% in North Dakota. “Lower interest rates have likely provided some support to farm finances and the values of farm real estate,” said the Fed. Interest rates on short-term operating loans and long-term farm real estate loans fell by roughly 1 percentage point during the fourth quarter of 2020.