Jeffrey D. Karrenbrock describes how strong livestock returns and more normal crop production helped boost the financial positions of both U.S. farmers and agricultural financial institutions in 1989. Karrenbrock cautions, however, that since the Eighth District’s farm income was not as severely affected by the 1988 drought as other regions of the nation, District farm income growth in 1989 may not have paralleled the income rebound induced by the drought recovery in the rest of the nation. The author concludes by briefly discussing how technological change and environmental concerns may affect agriculture in the new decade.