A quarterly review of the Farm Credit System shows reported steady earnings and higher capital, but a decline in loan quality, so far, in 2019.

The Farm Credit Administration received the report last week that outlines economic issues affecting agriculture, with an update on the financial condition and performance of the Farm Credit System.

Although the levels of portfolio credit risk are acceptable, they are rising, and the increase “underscores the significant operating challenges facing System borrowers.”

Overall, the System remains financially safe, strongly capitalized, and well-positioned to support agricultural producers, according to the report.

Additionally, land values generally have remained stable, supported by the limited supply of farmland for sale.

Farm sector real estate debt has been rising for the past several years and is approaching the historical 10-year average.

Also, total farm debt relative to income in 2019 is high, but the Market Facilitation Program has slowed its advance.

The report says the MFP payments represent considerable support for the U.S. farm sector.