Fed surveys show Midwest farmland values up, with ‘stable land values’ ahead

By Agri-Pulse Staff

© Copyright Agri-Pulse Communications, Inc.

Washington, May 21 – First quarter surveys for the Seventh Federal Reserve District show generally positive but mixed results, with year-over-year farmland values up a solid 4 percent. That overall figure includes increases of 7 percent in Indiana and 8 percent in Iowa while Wisconsin farmland values decreased 1 percent. For the first quarter of 2010 relative to the fourth quarter of 2009, District farmland values rose 2 percent, with only Illinois having an increase of less than 2 percent.

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The Federal Reserve Bank of Chicago’s May Agricultural Newsletter reported that:

  • “There was also a quarterly increase of 2 percent in the value of “good” agricultural land, according to the April 1 surveys returned by 215 District bankers. At 1 percent, the growth in District farmland cash rental rates slowed down dramatically from 2009.
  • “The demand to purchase farmland during the first quarter of 2010 strengthened from a year ago. A rising share of purchases by farmers buoyed this demand. However, the amount of farmland for sale, the number of farms sold, and the acreage sold weakened in the first three months of 2010 relative to the same period in 2009.
  • “The vast majority of the bankers anticipated stable land values during the second quarter of 2010.
  • “Trends in agricultural credit conditions were unchanged during the first quarter of 2010. There was stronger demand for non-real-estate farm loans and greater availability of funds for lending compared with the same period in 2009. Loan repayment rates were lower, while renewals and extensions of agricultural loans were higher.
  • “Interest rates on farm loans continued to move lower, averaging 6.13 percent for new operating loans and 6.04 percent for real estate loans. Loan-to-deposit ratios averaged 73.7 percent—more than 5 percent under the level preferred by the respondents.”

For more details on the survey’s findings, go to: www.chicagofed.org/digital_assets/publications/agletter/2010_2014/may_2010.pdf

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