ST. LOUIS, Nov. 15, 2013 – Farmland values and cash rents were down in the third quarter of 2013, according to the latest Agricultural Finance Monitor, published by the Federal Reserve Bank of St. Louis. Despite these declines, farm income rose modestly across the District served by the Bank.

The survey for the report was conducted Sept. 11 through Sept. 30, 2013. The results are based on the responses from 47 agricultural banks within the boundaries of the Eighth Federal Reserve District, which comprises all or parts of the following states: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Values for quality farmland across the District saw a decrease of six percent from the second-quarter average. Values averaged $5,332 per acre in the third quarter of 2013, down from $5,672 per acre in the previous quarter. Despite this decline, quality-farmland values remain 9.1 percent higher than at the same point last year.

Looking forward, “Bankers expect further erosion in District quality-farmland values over the next three months with an index value of 88,” stated the report. 

According to the survey, the value of pastureland averaged $2,377 per acre in the third quarter, a gain of 1.4 percent over the past four quarters.

Farm income across the District increased modestly from the same quarter one year ago. This increase is in line with previous reports, which have generally indicated healthy farm economic and financial conditions in the District. “Going forward, survey respondents expect farm income levels in the fourth quarter of 2013 to remain modestly above their levels from a year earlier,” said the report.

In addition, the survey indicated that capital and household spending increased modestly in the third quarter relative to the same period one year ago.

Cash rents for quality farmland across the District averaged $181 per acre in the third quarter, which was down slightly from the second quarter at $183 per acre. However, cash rents for ranchland or pastureland rose modestly in the third quarter, $62 per acre, compared with their second-quarter average, $57 per acre.

According to the survey, “Average cash rents have moved steadily upward since the second quarter of 2012—though at an uneven pace. Bankers expect that cash rents for both quality farmland and ranch- or pastureland are expected to increase modestly over the next three months.”

Expectations for farm income, expenditures and several other key variables in the third quarter were exceeded, relative to expectations from three months earlier. “In particular, expectations were exceeded for farm income, capital spending, availability of funds to extend loans and the rate of loan repayment,” stated the report.

The report noted that initial data are not adjusted for any seasonal irregularities, so users are cautioned to interpret the results to predict conclusions about longer-run trends.

Also, the number of responses from each of the four zones in the District is relatively smaller, entailing a higher-than-normal margin of error. The bank to discontinued publishing zone-by-zone results and the results now refer to the entire Eighth District


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