3Q farm in­come dips, says Agri­cul­tural Fi­nance Mon­i­tor sur­vey

The Pak Banker - - Front Page -

ST. LOUIS

While the drought con­tin­ues to dampen ex­pec­ta­tions of farm in­come po­ten­tial across much of the Mid­west and Mid­South, agri­cul­tural lenders ex­pect crop in­surance and higher crop prices to help mit­i­gate much of the im­pact.

In ad­di­tion, farm­land val­ues across the en­tire re­gion con­tin­ued to rise through­out most of the District, ac­cord­ing to third quar­ter sur­vey re­sults from the Fed­eral Re­serve Bank of St. Louis.

The Agri­cul­tural Fi­nance Mon­i­tor sur­vey, con­ducted from Septem­ber 15 through Septem­ber 28, was based on the re­sponses of 75 agri­cul­tural banks lo­cated within the bound­aries of the Eighth Fed­eral Re­serve District, which is com­prised of all or parts of the fol­low­ing seven Mid­west and Mid-South States: Arkansas, Illi­nois, In­di­ana, Ken­tucky, Mis­sis­sippi, Mis­souri and Ten­nessee. The District is bro­ken into four zones: Lit­tle Rock, Louisville, Mem­phis and St. Louis. For this sur­vey, an agri­cul­tural bank is de­fined as a bank for which at least 15 per­cent of its to­tal loans out- stand­ing fi­nances agri­cul­tural pro­duc­tion or pur­chases of farm­land, farm equip­ment, or farm struc­tures.

Since this is only the sec­ond such sur­vey con­ducted for the Eighth District, his­tor­i­cal trends and other fac­tors such as po­ten­tial sea­sonal ir­reg­u­lar­i­ties were not avail­able for eval­u­a­tion and com­par­i­son. Its re­sults should be in­ter­preted care­fully and not be used to draw con­clu­sions about longer-term trends. Farm In­come Ex­pec­ta­tions.

Over­all, re­sponses from District bankers sug­gest that farm in­come and cap­i­tal spend­ing were sig­nif­i­cantly lower in the third quar­ter 2012 com­pared with third quar­ter 2011. Based on a dif­fu­sion in­dex method­ol­ogy with a base of 100 (re­sults above 100 in­di­cate pro­por­tion­ately higher lender es­ti­mates com­pared with the same quar­ter a year ear­lier; re­sults lower than 100 in­di­cate lower lender es­ti­mates), the third quar­ter in­dex value stood at 80, com­pared with 140 for the sec­ond quar­ter 2012.

Look­ing for­ward, lender ex­pec­ta­tions were lower for the fourth quar­ter, with an av­er­age Eighth District ex­pec­ta­tions in­dex value of 77.

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