U.S. Farmland Prices Continue to Decline

The Federal Reserve’s Kansas City bank reported that land values in the U.S. Corn Belt fell by the most since the global financial crisis, while appreciation in the central Plains market has slowed “considerably” and prices are expected to drop further, according to Agrimony.com.

Farm values in Plains states rose by 2.0%, year on year, for irrigated land and by 1.2% for non-watered plots, the weakest price growth pace since 2009.

“After several years of strong price appreciation… cropland value gains have dropped considerably,” the Fed said, adding that about one-third of bankers contacted for its survey forecast a further decline in values, against only 5% foreseeing an increase.

A separate report, from the Chicago Fed, on a Corn Belt region encompassing states such as Iowa, Illinois and Indiana, showed prices stagnated since last year and falling by 2% quarter on quarter, the biggest drop since 2008.

The value decline was blamed on falling crop prices that cut farmers’ income prospects, despite the likelihood of record yields.

“The continuation of a dramatic decline in corn and soybean prices helped drive down farmland values across most of the district,” which also includes Michigan and Wisconsin, the Fed’s Chicago bank said.

In this area, lenders were even more downbeat on prospects than those surveyed by the Fed’s Kansas City bank, with 56% expecting values to fall in the October-to-December period, compared with only 1% expecting an increase.

Furthermore, “respondents anticipated the demand to acquire farmland this fall and winter to be weaker than a year ago for both farmers and nonfarm investors”.

Nearly one-half of bankers forecast a drop in the volume of deals this quarter, compared with a year ago, while 11% expected an increase. S