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Chicago Fed: WI Farmland Values Unchanged From Last Year
Wisconsin Ag Connection - 05/10/2019

After trending upward annually for about five years, the value of Wisconsin farmland remained flat when compared to this time last year, and actually dropped in value during the first quarter of 2019. According to the latest survey of agricultural lenders in the Seventh Federal Reserve District, regional farmland prices were also unchanged from early 2018, but rose slightly during the first three months of this year because of strong sales in Iowa and Indiana.

In the most recent questionnaire of 168 rural bankers, survey respondents felt there was more farmland available for sale in the past three to six months, even as the demand to purchase such property was a bit lower. However, the number of farms and acreage sold were roughly the same during the winter and early spring of 2019 compared with a year ago.

"The stability of district farmland values persisted even as the demand for agricultural land softened from a year ago and the supply on the market grew modestly," said Reserve Economist David Oppedahl.

The report noted that good farmland in Wisconsin fell four percent between January and March of this year, while Iowa and Indiana both rose by two percent. Illinois saw no change.

Meanwhile, agricultural credit conditions continued to deteriorate because of the weak farm economy. Repayment rates for non-real-estate farm loans were lower than a year ago; and renewals and extensions were in high demand. While the amount of collateral required was higher than a year earlier, the availability of funds to lend was lower.

"Another indicator of weakening markets for farmland was a three percent decrease in cash rental rates for agricultural ground from 2018 to 2019," Oppedahl pointed out. "For 2019, average annual cash rents to lease farmland were down two percent in Illinois, three percent in Indiana, four percent in Iowa, two percent in Michigan, and four percent in Wisconsin. This was the sixth straight year of declining real cash rents--the longest such downturn since 1981."

Looking ahead, the vast majority of the survey respondents anticipated agricultural land values to be unchanged in the second quarter of 2019. About a quarter of the bankers expect them to decline. They further projected that the overall volume of non-real-estate farm loans would go up during the second quarter of the year relative to the same period of 2018. About a third of those asked said there would be a higher level of non-real-estate farm loans to help pay the bills.

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