The farm real estate market was resilient in the face of higher interest rates and “some moderation” in the farm economy this spring, according to commercial lenders surveyed by five regional Federal Reserve banks. The average value of non-irrigated cropland in the Farm Belt climbed 7 percent in the past year with gains as small as 2 percent in Iowa and as large as 23 percent in northern Indiana, said an Ag Finance Update.
“Growth in land vales has eased from recent years but remained steady in most states and considerably stronger in some areas,” said the report, written by the Kansas City Fed and based on surveys of ag bankers by regional Feds in Chicago, Dallas, Kansas City, Minneapolis, and St. Louis. “The growth in farmland values has softened somewhat more for lower-priced land but a steady supply of land sales and strong demand from farmers likely supported broad resiliency of real estate values.”
Values grew slowly in the western Corn Belt and the central Plains; up 2 percent in Iowa, 4 percent in Kansas, and 5 percent in Nebraska, compared to spring 2022. They fell 1.5 percent in Colorado and Wyoming. The largest increases were 23 percent in northern Indiana, 20 percent in North Dakota, and 12 percent in South Dakota.
“Farm income moderated in all the participating districts during the second quarter,” said the report written by economists Francisco Scott and Ty Kreitman of the Kansas City Fed. “Margins for many major commodities have thinned in recent months alongside elevated production costs and softening prices.” But record-high farm income in 2021 and 2022 put cash in farmers’ pockets and has “continued to support agricultural credit conditions.”
Earlier this month, the USDA said cropland values across the country skyrocketed 33 percent since the pandemic hit the United States, to reach an average of $5,460 an acre.