Farmland Values in the Eighth District Decline

Farmland values, farm income and expenditures all declined in the second quarter compared with a year ago, according to the Federal Reserve Bank of St. Louis’ most recent Agricultural Finance Monitor. The publication covers agricultural conditions in the Eighth District, which comprises all or part of seven states.¹

Farmland Values

Quality farmland prices averaged $5,473 per acre in the second quarter of 2014, down 3.5 percent from this time last year. Ranch and pastureland prices also declined in the second quarter of 2014, down 2.5 percent from this time last year.

Lenders reported that they expect prices for quality farmland to continue to decline in the third quarter, relative to the same period last year, but they expect ranch and pastureland prices to rise slightly.

Farm Income and Expenditures

Average farm income, farm household spending and capital equipment expenditures also declined during the second quarter of 2014 compared with a year ago. Looking ahead, all three categories in the third quarter are expected to be lower than a year earlier.

Cash Rents

While quality farmland prices have declined, cash rents have increased to their highest levels since the St. Louis Fed began its Agricultural Finance Monitor survey in the second quarter of 2012. Cash rents during the second quarter averaged $191 per acre for quality farmland. Lenders indicated they expect cash rents to remain steady in the next quarter.

Lending Conditions

Proportionally more bankers cited weaker agricultural loan demand in the second quarter relative to the same period a year ago, but had slightly higher expectations for strengthened loan demand in the third quarter. Regarding availability of funds to lend, a proportionately larger number of bankers had more loanable funds available in the second quarter than the year before. The third lending indicator, the rate of loan repayment, showed slightly more bankers reporting higher loan repayment rates than a year ago, and they expect a similar increase in the third quarter.

Notes and References

¹ The Eighth District’s states are Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Additional Resources

• Agricultural Finance Monitor
• On the Economy: Four Metro Areas Paint Four Different Pictures of Job Growth in Eighth District
• Central Banker: Agriculture Boom Continued in 2013