While the 3-percent drop was the first annual loss in nearly 30 years, the index of inflation-adjusted agricultural land values for the five-state district was 68 percent higher than its peak in 1979, following the export boom of the 1970s. Land values bottomed out in the agricultural recession of the mid-1980s. The Chicago Fed said bankers tightened their lending standards following last year’s drop in commodity prices. Even so, they expected that only 1.4 percent of borrowers were unlikely to qualify for new operating credit this year.
The St. Louis Federal Reserve Bank said the value of quality farmland in its district at the end of 2014 was 0.8 percent higher than one year earlier. Lenders were pessimistic about land values for the first quarter of this year. By the end of 2014, pastureland values were down 2.6 percent from the previous year, said the Agricultural Finance Monitor of the St. Louis bank.
The Chicago Fed district includes Iowa, Wisconsin, Michigan and the central and northern sections of Illinois and Indiana. The St. Louis Fed district encompasses southern Illinois and Indiana, the eastern two-thirds of Missouri, all of Arkansas, the northern half of Mississippi, the western-most quarter of Tennessee and the western two-thirds of Kentucky.
The Chicago Fed’s Ag Letter is available here.
The St. Louis Fed’s Agricultural Finance Monitor is available here.