Agricultural land values in the Midwest rose by an average of 5% during the past year, the smallest gain in three years, said ag bankers taking part in a Chicago Federal Reserve Bank survey. While Indiana notched a 16% increase, land values in Iowa were stagnant and one lender expressed surprise that land values did not decline in the Hawkeye State, said the Chicago Fed’s quarterly AgLetter.
“We’re still seeing increases from a year ago but generally they’re smaller than they’ve been in the past couple of years,” said David Oppedahl, policy adviser at the Chicago Fed. Indiana farmers “have had a very good year” for crops despite dry weather. Iowa has hit harder by drought. Overall, ag bankers expect land prices to hold steady during the final quarter of this year, said the AgLetter.
After two years of record-high income, the outlook is for lower income this year, with corn and soybean prices down by a combined 20%, said Oppedahl. Interest rates are up. The farm economy was softening “from some of the best years ever.”
Nationwide, the agricultural economy softened during the third quarter, said the Kansas City Federal Reserve. “Profit opportunities have thinned for many agricultural producers relative to a year ago, but agricultural credit conditions and farm real estate values have held firm with ongoing support from a strong agricultural economy in recent years.”