Farmland values continued to increase during the second quarter of 2013, according to a report Agricultural Finance Monitor published by the Federal Reserve Bank of St. Louis.

Farm income, as well as capital and household spending, also increased somewhat compared to last year.

The survey for the report was conducted from June 11 through June 28, 2013.

 The results were based on the responses of 48 agricultural banks located within the boundaries of the Eighth Federal Reserve District.

The Eighth District comprises all or parts of the following seven Midwest and Mid-South States: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.



Farmland values



On average, Eighth District quality farmland and ranch or pastureland prices were higher than first-quarter 2013 and second-quarter 2012 levels. In addition, many lenders reported they expected prices for quality farmland and ranch or pastureland to increase in the third quarter relative to the third quarter 2012.



Quality farmland prices averaged $5,672 per acre in the second quarter of 2013, up 11 percent from an average $5,111 in the first quarter of 2013 and up more than 20 percent from $4,705 per acre in the second quarter of 2012.

Ranch and pastureland prices were also slightly higher in the second quarter of 2013, with District lenders reporting average prices of $2,372 per acre, up about 4 percent from $2,274 per acre in the first quarter 2013 and up close to 1 percent from $2,349 per acre the previous year.



Looking ahead to the third quarter, lenders reported they expect land values to rise relative to last year. “A proportionately larger number of respondents expect quality farmland and ranch or pastureland values to increase in the third quarter relative to a year earlier,” the report said.

Using variables based on diffusion index methodology, the average expectations index for quality farmland in the third quarter of 2013 was 127, while for ranch and pastureland prices, the index value was 108.

(With diffusion index methodology based on survey responses, 101-200 indicates overall expectations of higher values, while 0-99 indicates expectations of decreasing values. A value of 100 indicates expectations remain the same.)