November 20, 2009
Midwest farmland values dipped 4 percent in third quarter
Farmland values dropped 4 percent in the heart of the Midwest in the third quarter compared to a year ago, the Federal Reserve Bank of Chicago said Thursday (November 19).
Agricultural credit conditions were also weaker than a year ago, and agricultural bankers are expecting weaker farmland prices during the fourth quarter as well.
The report covers the Seventh Federal Reserve District, which includes all of Iowa and most of Illinois, Wisconsin, Indiana and Michigan.
It was the third straight quarter that farmland values dropped from the prior year. However, values in the third quarter were up 2 percent from the second quarter, and agricultural credit conditions were about the same as they were in the second quarter.
Demand for farmland is expected to ebb during the fall and winter, the report said.
"A key factor in the anticipation of lower demand for farmland was the diminished stream of earnings that farms would produce under current market conditions," the report said.
The report said repayment on non-real-estate farm loans were lower in the third quarter than during the same time a year ago, with just 10 percent of bankers reporting higher rates of loan repayment and 21 percent reporting lower rates.
