News

Farm income down but land values up

The latest survey of bankers in the Federal Reserve Bank of St Louis district finds grain prices continued to drop, farm income fell and farm expenditures declined in the third quarter. The 41 bankers responding to the survey expect the trend to continue in the fourth quarter.  The bankers say young farmers with no equity will have a difficult time making payments on land and equipment and many customers will face crop loan carryovers this year.

The bankers say they did have more loanable funds available in the third quarter than a year ago but expect availability to tighten-up in the fourth quarter and repayment rates to slow.

Despite the drop in income, farmland values in the District rose during the third quarter. Quality farmland averaged $6,120 per acre, up nearly 12 percent from the second quarter.  Rangeland and pastureland increased 11 percent to average $2,570 per acre.  Cash rent also increased with quality farmland rates up 1.6 percent for the quarter and pastureland rates increased 6.8 percent.

When asked to assess the loan-to-value and debt-to-equity ratios the bankers say the average financial condition of the Eighth District ag borrower has not deteriorated over the past three years.

Read the full Agricultural Finance Monitor report here:

The Eighth Federal Reserve District covers areas in Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.