Farmland values in the fourth quarter were above year-ago values. Ranchland and irrigated cropland values increased more than 4% over last year, while dryland values were up about 2%. Overall, respondents continued to expect farmland values to trend up.
Demand for agricultural loans continued to decline, as did loan renewals and extensions. Loan repayment rates increased again this quarter. Volumes for most types of loans continued to decrease. The exception was operating loans, with demand the same as fourth quarter last year.
Average interest rates (variable-rate loans) were: operating – 5.75%; intermediate – 5.71%; and farm real estate – 5.42%.
After falling modestly in the third quarter, quality farmland prices – as well as farm income – rebounded in the fourth quarter of 2013, according to bankers in the Federal Reserve Bank of St. Louis (covering all or parts of Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee). Fourth-quarter farmland prices were up 12.2% from a year earlier. The fourth-quarter value of ranch or pastureland was up 5.2% from the previous quarter and 4.3% from the same quarter a year earlier.
Cash rents for quality farmland rose 5% from the third quarter; cash rents for ranch or pastureland also rose modestly.
While farmland values and income were up in the quarter, proportionately more respondents expect farm income and quality farmland values to decline over the first quarter of 2014. However, respondents see no change in average cash rents for ranch or pastureland. Respondents also expect farm household expenditures and farm equipment expenditures in the first quarter of 2014 to be lower than a year earlier.
A modest majority of bankers believe that a reduced federal mandate for biofuel usage will lead to some reduction in quality farmland values. The bankers also believe lower-than-expected commodity prices in 2014, by far, pose the greatest risk to the farm sector.
The survey showed demand for farm loans in the fourth quarter of 2013 was modestly below a year ago, but respondents expect demand will pick up in the first quarter of 2014. Interest rates on fixed-rate loans declined modestly from their third-quarter averages. By contrast, interest rates on variable-rate loans were up slightly from three months earlier. Average interest rates (variable-rate loans) were: operating – 5.01%; machinery/intermediate – 5.1%; and farm real estate – 4.93%.
Richmond and Minneapolis
Reports from Richmond and Minneapolis districts were not yet available.
District reports available
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