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Abstract
For the second quarter of 2013, “good” farmland values
were up 17 percent from a year ago in the Seventh Federal
Reserve District. However, agricultural land values registered
no gain in the second quarter relative to the fi rst
quarter of 2013, according to a survey of 211 agricultural
bankers. The last time there was no quarterly increase in
agricultural land values was in 2009. Generally, the stellar
year-over-year gains in farmland values across the fi ve
District states masked the comparative weakness of the
quarterly results. Moreover, the percentage of survey respondents
anticipating farmland values to fall during the
third quarter of 2013 was the same as the percentage predicting
them to rise (7 percent); 86 percent of responding
bankers expected farmland values to be stable.
The District’s agricultural credit conditions were
generally better in the second quarter of 2013 than a year
earlier. The availability of funds for lending by agricultural
banks was up relative to a year ago; the banks’ deposits
were enhanced not only by high crop prices but also by
payments for insured losses due to last year’s drought.
Repayment rates for non-real-estate farm loans were higher
than a year ago, with 94 percent of the respondents’ agricultural
loan portfolio having no signifi cant repayment
problems. Renewals and extensions of non-real-estate farm
loans declined from the level of a year earlier. The responding
bankers perceived that non-real-estate loan demand
for the April through June period of 2013 was below that
for the same period last year. For the second quarter of
2013, the District’s average loan-to-deposit ratio edged
up to 64.6 percent—12.6 percentage points below the average
level desired by survey respondents. Finally, interest
rates on farm loans rose for the fi rst time since early 2011.