Land Values Moderate as Farm Economy Slows
Federal Reserve Banks-
Financial data from USDA and the Federal Reserve Bank districts report a “slowing” in the agricultural economy. However, this reduction in the rate of increase follows several years of strong acceleration. In general, farm incomes and land values remained strong in 2023. Farmland values increased, just not at a breakneck speed. Most bankers expect land values to level off or slightly decline in 2024.
Non-irrigated cropland values in the five central U.S. Federal Reserve districts are still about 5% to 7% higher than a year ago, with the Dallas Federal Reserve Bank reporting a 15% annual increase in the third quarter of 2023, compared to Q3 of 2022.
In the Midwest, farmland values in the Chicago Federal Reserve district, were mostly flat after July 1, with agricultural bankers reporting only a 1% increase from July 1 to October 1.
“Agriculture credit conditions remained sound, but conditions have eased from a period of considerable strength,” affirmed Nate Kauffman, senior vice president, economist and Omaha Branch Executive of the Kansas City Federal Reserve Bank. While farm income in 2023 weakened compared to 2022, repayment rates on farm loans were largely unchanged in all regions compared to a year ago, Kauffman reported.
Despite a widespread drought across the Chicago Fed District, corn and soybean yields for its five states in 2023 dipped just a bit from 2022 and stayed close to their historically highest levels, based on U.S. Department of Agriculture (USDA) data.