Federal Reserve banks: Farmland values down
February 13, 2017
Farmland values have declined, according to reports issued by the Federal Reserve banks in Chicago, Kansas City, St. Louis and Dallas.
The reports were first noted by the Food and Environment Reporting Network.
"Agricultural land values in the Seventh Federal Reserve District suffered a third consecutive annual decrease, yet the 1 percent decrease for 2016 was smaller than the 3 percent declines for the previous two years," wrote Chicago Federal Reserve Bank business economist David Oppedal in the bank's February Agletter.
"Farmland values and cash rents declined moderately in the fourth quarter of 2016," wrote Kansas City Federal Reserve Bank economist Cortney Cowley and assistant economist Matt Clark in the bank's 10th District Survey of Agricultural Credit Conditions.
"Bankers across the 10th District noted that persistent weakness in farm income continued to weigh on farmland values," they wrote. "Although most farmland purchases in the quarter were financed with new debt, the portion of new loans with a cash down payment decreased. The persistent and widespread deterioration in farm income has occurred alongside increasing loan demand and lower repayment rates. These trends are expected to continue in the first quarter of 2017."
"According to the latest survey of agricultural bankers in the Eighth Federal Reserve District, fourth-quarter farm income declined from the previous year, continuing the downward trend reported in the past several surveys," the St. Louis Federal Reserve Bank wrote in its Agricultural Finance Monitor.
"Lower incomes continue to push down farmers' household and capital spending. Bankers also reported that agricultural land values and cash rents moved in tandem with farm income in the fourth quarter, with values and rents falling from the previous year for quality farmland and ranch or pastureland."
"Real district land values decreased this quarter," the Dallas Federal Reserve Bank said in its fourth quarter 2016 Agricultural Survey.
"Real irrigated land values fell 5.2 percent from last quarter. Real dryland values declined 4.3 percent, while real ranchland values were down 3.3 percent. However, according to bankers who responded in both this quarter and fourth quarter 2015, nominal district land values increased year over year." ❖