What is in this article?:
• 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.
Average farm income and spending rose slightly in the second quarter of 2013 compared with a year ago. “On net, respondents indicated that second-quarter District farm income, along with capital and household spending, increased modestly relative to their respective levels one year ago,” the report said.
Based on diffusion index methodology, survey results showed an actual income index level of 108 for the second quarter of 2013 across the District.
Looking ahead at the third quarter, lenders indicated they expected lower farm income, with survey results showing a diffusion index value of 91. “Across the District, bankers expect farm income to fall over the course of the next quarter compared with the third quarter of 2012,” according to the report.
Average cash rents per acre for quality Eighth District farmland during the second quarter of 2013 were higher than the first quarter 2013 and the second quarter of 2012.
For the second quarter 2013, cash rents for quality farmland averaged $183 per acre, up 6.7 percent from an average $171 per acre in the first quarter 2013 and up 12.9 percent from an average $162 per acre the previous year.
Meanwhile, lenders reported cash rents for ranch or pastureland of $57 per acre, down from the first quarter’s average of $64 per acre, but remaining above last year’s average of $53 per acre.
Looking forward, lenders expect rents to increase in value for all land categories during the third quarter of 2013.
The report also noted that “anecdotal information collected from other sources suggests some shift in cash rents toward a variable or profit-sharing basis,” might not be fully captured in current cash rent data.
Ag loan demand and repayments
On average, lenders reported that while demand for agricultural credit across the District remained unchanged in the second quarter compared with a year ago, they expected loan demand to pick up in the third quarter.
In addition, survey results showed more funds were available to prospective borrowers during the second quarter of 2013 than a year ago, and this should remain the case in the third quarter.
Loan repayment rates also remained essentially the same compared with a year ago, and expected to remain unchanged in the third quarter.
Average interest rates on most types of loans increased slightly from the first quarter of 2013, with rates on variable interest loans increasing more than fixed-rate loans.
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