Jeffrey D. Karrenbrock examines how the drought affected agriculture in both the U.S. and the Eighth Federal Reserve District. Crop producers experienced sharp drops in yields, while livestock producers faced higher feed costs. Karrenbrock points out that, despite lower net farm income, both farmers and agricultural lending institutions were able to improve their financial positions on average during 1988. Factors helping to limit the financial damage to some farmers included higher grain prices, strong agricultural exports and continued government support. On net, the effect of the drought was to slow but not stop the agricultural recovery that started in 1984.