Led by weak crop prices and exacerbated by a sharp decline in livestock prices, particularly for cattle, net farm income dropped significantly in 2015, according to a Federal Reserve Bank economist.

In fact, farm income has dropped 55% since 2013, said Nathan Kauffman, an economist who also serves as assistant vice president and Omaha, Neb., branch executive with the Federal Reserve Bank of Kansas City, Mo. Kauffman addressed farmers and ranchers from across the U.S. during a workshop on trends in farm income and land values at the American Farm Bureau Federation’s 97th Annual Convention and IDEAg Trade Show.

“I don’t have the best of news to share this morning,” Kauffman said: The “sky is not falling, but this is definitely a period of adjustment.”

However, he said the drop in income has so far not been accompanied by a drop in farmland values.

“Farmland values have, in many ways, defied expectations associated with lower crop values,” he said.

Among the factors driving the decrease in crop prices is a gradual buildup in the global supply of all major commodities, including corn, soybeans and wheat.

“Global inventory is very, very high,” Kauffman explained.

At the same time, key demand factors have also “softened significantly,” he said, specifically mentioning ethanol production, which has been nearly flat in the past few years, and U.S. exports to China, which have decreased steadily as growth has slowed in that market.

An additional factor is credit conditions, which have deteriorated in the past two or three years. A strong dollar, coupled with a somewhat sluggish global economy, has made selling crops overseas more difficult, Kauffman added.

Despite all these negatives, farmland values have remained relatively steady.

“The changes in crop values haven’t been met with changes in land prices,” he said. One of the major reasons is that there just hasn’t been a lot of land on the market. In addition, he noted that how land prices fare depends very much on the quality of the land.

“It’s not across the board,” Kauffman said. “Very-high-quality land is fetching very good prices,” but more marginal land is seeing some decreases. He added that while land prices have increased faster than rents, both have been slow to adjust to the decreases in crop prices.

“It’s not what you would have expected when corn drops from $6 to $3(/bu.),” he said.