St. Louis Fed: Survey shows farm income increased Q4
Farm income increased in the fourth quarter of 2013 (relative to a year earlier), according to the latest Agricultural Finance Monitor, published by the Federal Reserve Bank of St. Louis. Likewise, quality farmland prices in the fourth quarter were also up from a year earlier.
The survey for the report was conducted Dec. 11 through Dec. 31, 2013. The results presented are based on the responses from 49 agricultural banks within the boundaries of the Eighth Federal Reserve District. The Eighth District includes the state of Arkansas and portions of Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee.
Farm Income and Expenditures
Farm income increased in the fourth quarter of 2013 compared with the same period a year earlier. However, “farm income levels in the first quarter of 2014 are expected to be lower than a year earlier” stated the report. By contrast, a majority of respondents reported that capital equipment spending in the fourth quarter was below year earlier levels.
Current and Expected Land Values
The survey found that quality farmland values across the District averaged $5,868 per acre in the fourth quarter of 2013, which was modestly higher than the third-quarter average of close to $5,300 per acre. When measured against figures from a year earlier, quality farmland values in the Eighth District increased by 12.2 percent. The value of Eighth District ranch or pastureland averaged $2,500 per acre in the fourth quarter of 2013, an increase of 5.2 percent from the previous quarter and 4.3 percent from a year earlier.
Cash rents for quality farmland across the District averaged $190 per acre in the fourth quarter, up 5 percent from the third quarter. Cash rents for ranch or pastureland ($65 per acre) also rose modestly in the fourth quarter compared with their third-quarter average ($62 per acre).
For the second-consecutive survey, “proportionately more bankers expect quality farmland values to decline over the next three months relative to a year earlier [index value of 89],” stated the report. However, respondents see no change in average cash rents for ranch or pastureland over the next three months relative to a year earlier.
Outcomes Relative to Previous-Quarter Expectations
Farm income and household spending in the fourth quarter were roughly in line with bankers’ expectations; however, proportionately more respondents indicated that expenditures on capital equipment were less than expected in the fourth quarter. In terms of financial variables, the supply of funds to extend loans was modestly higher than respondents expected, while the opposite was the case for the demand for farm loans.
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