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Chicago Fed: Wisconsin Farmland Values Were Up From Last Year
Wisconsin Ag Connection - 05/11/2018

Wisconsin continued to outpace the rest of its neighbors in the growth of farmland property values during the past year. According to the latest survey of agricultural lenders in the Seventh Federal Reserve District, farmland values in the upper Midwest between January through March 2018 were about the same as a year ago; but rose one-percent compared to the previous quarter. Wisconsin ag property increased by three-percent from last year, and also rose three percent from the fourth quarter of 2017.

In comparison, the survey noted that Illinois values fell for the year, with Iowa properties selling two-percent higher and Indiana showing a three-percent gain in value.

"Remarkably, Wisconsin has not seen a year-over-year decrease in farmland values since the second quarter of 2015," said Reserve Economist David Oppedahl. "After being adjusted for inflation with the Personal Consumption Expenditures Price Index, District agricultural land values were down one percent in the first quarter of 2018 from the first quarter of 2017."

In the most recent questionnaire of nearly 181 rural bankers, survey respondents indicated that cash rental rates continued to go down this year, falling five percent from early 2017. With cash rentals making up 80 percent of District agricultural land operated by someone other than the owner, changes in their terms are a key indicator of agricultural conditions, he said.

"For 2018, average annual cash rents to lease farmland were down five percent in Illinois, three percent in Indiana, six percent in Iowa, three percent in Michigan, and seven percent in Wisconsin."

As expected, agricultural credit conditions have stumbled in the first quarter of the year relative to the same period in 2017. The index of repayment rates for non-real-estate farm loans stayed at 53 for the first quarter of 2018, with two percent of responding bankers observing higher rates of repayment and 49 percent observing lower rates. Moreover, 40 percent of the survey respondents noted higher levels of loan renewals and extensions over the January through March period of 2018 compared with the same period last year, while 2 percent noted lower levels of them.

Looking ahead, about two-thirds of the bankers predicted that farmland values would remain stable in the second quarter, while 19 percent expected a decline. Farm real estate loan volumes are expected to be unchanged over the spring and summer relative to last year. In contrast, respondents projected that the overall volume of non-real-estate farm loans--such as financing for grain storage, machinery or cattle--would increase during the second quarter.

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