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Farmland Values Are Stable Despite Income and Trade Turmoil
Across the Farm Belt, cropland values generally are holding steady in the fifth year of low commodity prices and are bolstering farm finances. Economist David Oppedahl of the Chicago Federal Reserve says stellar yields are a key reason in the Midwest. Near-record corn and soybean yields keep revenue flowing.
Land values in the central Midwest, steady overall during 2018, were expected to remain strong into planting season this year, according to ag bankers surveyed by the Chicago Fed. The value of “good” farmland in the district rose by 1% in the closing months of 2018. The St. Louis Federal Reserve, whose district includes eastern Missouri, southern Illinois, and southern Indiana, says its survey of bankers found a 3.4% increase in value for “quality” farmland in the fourth quarter of 2018. Lenders were less sanguine going into this year, expecting a decline in the first quarter, just like the opening months of 2018.
Demand for farmland was strong in the Plains, with farmers as the buyers in three of every four sales, says the Kansas City Fed. Land values “declined only 3%” in late 2018 despite pressure from a weak farm economy, it said. “The value of farmland continued to provide ongoing support to the farm sector and remained a key factor to monitor in 2019.”
USDA Chief Economist Robert Johansson says low interest rates and a subdued inflation rate have helped maintain equity in high farmland values.
In the Minneapolis Federal Reserve district, where land values fell slightly in late 2018, ag bankers overwhelmingly name commodity prices as their paramount concern, far more than trade disputes or rising interest rates for this year. “A year of average yields with current commodity pricing would be very detrimental to our area’s farm operations,” says one Minnesota banker.
This article was produced in collaboration with the Food & Environment Reporting Network, an independent, nonprofit news organization producing investigative reporting on food, agriculture, and environmental health.
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