According to the survey responses from 39 agricultural banks in the Eighth District, farm income, farm household spending, and capital equipment expenditures all declined in the fourth quarter relative to the same period a year earlier. In terms of fourth-quarter expectations, fewer respondents indicated that farm income declined than was expected in the prior survey; farm household spending was largely as expected. Further, significantly more respondents (relative to prior survey) reported that capital equipment expenditures in the fourth quarter fell short of their previous year's levels. By and large, a significant majority of respondents expect these downward trends to hold in the first quarter of 2015.

The average quality farmland values reported by common respondents in the fourth quarter indicate that quality farmland values were little changed from one year ago (+0.8 percent). However, a majority of bankers expect quality farmland prices to soften in the first quarter of 2015 compared with prices a year earlier. Respondents indicate that, for the quarter, their funds available for lending increased ahead of expectations while loan demand increased but fell somewhat short of expectations.
For this survey, we asked two special questions aimed at assessing the general underwriting of, and the risks associated with, loans secured by farmland. The responses suggest that bankers are employing prudent management practices in this area.