Kansas & Nebraska Farmland Values Increase

The Federal Reserve Bank of Kansas City’s Survey of Agricultural Credit Conditions found that soaring farm profits accelerated cropland and ranchland value gains in the seven-state District, particularly in Kansas and Nebraska. Cropland values posted double-digit gains from year-ago levels, and ranchland values recorded their sharpest increase in two years.

Cash rental rates rose more modestly and some District bankers expressed concern that current rental income may not sustain lofty land values. Still, many of the 253 survey respondents felt that farm income and farmland values would rise further in the coming months.

Higher farmland values were fueled by strong demand from both farmers and nonfarm investors, despite a slight increase in the number of farms for sale. District bankers reported that farmers remained the primary buyers of farmland but many contacts noted an uptick in investor purchases compared to last year. Farmland values also strengthened with higher land lease revenues from expanded oil and gas activity, especially in Oklahoma and Wyoming.

Farm credit conditions improved and loan demand softened with higher farm income. More bankers reported lower operating loan demand and commented that many farmers used cash or vendor credit to pay for crop inputs and farm equipment. ◆