Ag bankers in the Midwest say farmland values were steady overall in 2018 and rose by 1 percent in the final three months of the year, reported the Chicago Federal Reserve on Thursday. “Stellar yields for district cropland supported farmland values in 2018,” although dairy farms struggled, said the regional Fed in its quarterly AgLetter.
One Wisconsin banker polled by the Chicago Federal Reserve said an increased number of farms quit dairying in 2018. Another said, “Dairy is the most stressed sector — financial stress and the tough January weather have many of our farmers ready to sell out.”
In the central and southern Plains, cropland values, whether for irrigated or non-irrigated land, declined by 3 percent in the closing three months of 2018, said the Kansas City Fed, based on its survey of lenders. Ranchland values increased slightly for the second quarter in a row, the first consecutive-quarter increase since 2015, according to the regional Fed.
Farmers accounted for more than 75 percent of the purchasers of farmland in the Plains, and demand has remained strong, said bankers. “During the current downturn in the agricultural economy over the past five years, the persistently low volume of land sales has contributed to the stability of farmland values. However, if the supply of farmland were to continue to increase in 2019, farmland values could be less stable,” said the Kansas City Fed.
The Minneapolis Federal Reserve said that in the upper Midwest and northern Plains, land values “continued to decrease somewhat in the final three months of 2018, though the pace of decline slowed compared to recent months.” High crop yields helped generate income for farmers despite low market prices. One Minnesota banker said, “A year of average yields with current commodity pricing would be very detrimental to our area’s farm operations.”