Farm income in the third quarter weakened measurably from a year earlier according to the latest survey of agricultural bankers in the Eighth Federal Reserve District. Bankers expect further declines in the fourth quarter. House­hold spending and farm expenditures on capital goods also continued to decline in the third quarter. Land valuations were reported to be mixed in the third quarter. Compared with a year earlier, quality farmland values declined by 2.6 percent, but values for ranch or pastureland rose 4.7 percent in the third quarter. Cash rents for both quality farmland and ranch or pastureland rose modestly in the third quarter. Bankers expect land values and cash rents for quality farmland and ranchland or pastureland to decline in the next three months compared with a year earlier. Lending conditions exhibited few stresses in the third quarter, although loan demand and availability of funds were modestly higher than bankers had expected three months earlier. Interest rates, both variable and fixed, rose slightly across most loan products, with fixed-rate loan products generally rising more than variable-rate products. According to a special question in the survey, most agricultural bankers perceive a weaker-than-expected fall harvest and an unexpected sharp decline in livestock prices as the largest potential risks to farmers in their area. A second special question asked bankers their view of the farm sector's prospects over the next five to 10 years. About half were optimistic, while only about 15 percent were pessimistic.