Farmland Values Continue to Slide Downward
Midwest farmland values are in the longest and sharpest decline since the mid-1980s agricultural recession. Lenders and analysts expect the slide to continue a year or two. “This is consistent with stagnant corn and soybean futures prices and a potential rise in interest rates,” says Iowa State University’s Wendong Zhang in releasing a survey showing land values in Iowa are down by 17.5% in three years.
The Chicago Federal Reserve Bank says the value of good-quality farmland fell by 3% in the year ending last October 1, according to its survey of farm bankers, who expected a further decline this winter. In the Chicago Fed’s district, land values fell the furthest in Michigan, Iowa, and Illinois. The drop in land values during the third quarter of 2016 “marked the fourth straight quarter of year-over-year declines ... the first time for such a streak since 1986-1987,” it says.
In the Central and Southern Plains, farmland values are 6% lower than a year ago, says the Kansas City Fed, and the year-on-year decline in autumn 2016 was the sharpest since the mid-1980s. In a regional Fed survey, ag lenders say they expect farm income, land values, and loan repayment rates to fall in coming months. “If these expectations hold, the slow but steady increase in farm financial stress appears likely to continue,” says the Kansas City Fed.
While Farm Belt land values reacted almost immediately to the 2013 collapse of the ag boom, the national average has been slower to respond. U.S. cropland values peaked at $3,020 an acre in 2015 and declined marginally to $3,010 an acre last year, according to USDA.
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.