Executive Summary

The results of this quarter's survey reflect agricultural finance conditions in the Eighth Federal Reserve District during the second quarter of 2019. For the twenty-second consecutive quarter, a majority of bankers who responded to the survey reported a decline in farm income compared with the same period a year ago. It was the highest proportion of bankers reporting lower income since the first quarter of 2016 when considering all observed data. Fewer bankers, but still a majority, expect farm income to remain lower next quarter compared with the same period last year. Multiple factors can influence responses from bankers that report lower farm income, such as flooding and depressed commodity prices. Bankers gave a similar downbeat assessment of the current quarter for farm household spending and capital spending as they did for income: An increasing majority reported a decline in those categories compared with levels one year ago. Expectations for the next quarter are stable for household spending and show only a slight improvement for capital spending. Household and capital spending are both considered closely related to trends in farm income. Values for farmland were reported 2.6 percent higher this quarter compared with a year ago. However, ranchland or pastureland values fell slightly, by 1.2 percent compared with a year ago. Cash rents for quality farmland in the second quarter fell 2.9 percent compared with a year ago, but in contrast, rents for ranchland or pastureland rose 4.3 percent. The improvement in rents for ranchland or pastureland reflects a partial recovery from the sharp decline reported in the previous survey. Pro­portionately more bankers reported an increase in loan demand in the second quarter compared with last year during the same period. The availability of funds was considered only slightly lower than a year ago by a majority of the survey respondents. A majority of bankers reported a decline in the rate of loan repayment this quarter compared with a year ago. This quarter's survey asked two special questions. The first question asked bankers to indicate the degree to which their respective lending area was impacted by flooding or other extreme weather during the first half of the year. The results showed a significant majority of bankers reported an impact on their lending area due to adverse weather. More than three-quarters of bankers reported a modest-­to-­significant impact, while less than one-fifth percent reported no impact. The second special question asked bankers to indicate the percentage of their agricultural borrowers who were, or likely will be, impacted by flooding or extreme weather during the first half of the year. Similar to the previous response, bankers indicated a majority of these customers were either significantly or modestly impacted by flooding or extreme weather earlier this year. A little over one-third of these customers were considered not to have been affected.