Gains in Farmland Values Slow

Fed Banks report slowing in pace of gain in farmland values
Fed Banks report slowing in pace of gain in farmland values
(Farm Journal Media)

Midwestern farmland values again rose in the second quarter but at a much-lower rate compared to the past year, report the Federal Reserve Banks of Chicago and Kansas City.

The Central Plains saw the value of all types of farmland increase an average of 2% versus the first quarter, the bank states. That is the slowest increase for cropland since the end of the 2020. The pace of gain for ranchland values slowed to 4%. However, values for all types of farmland remain about 20% higher than a year earlier.

Like land values, the acceleration in cash rents also showed signs of slowing, the bank notes. Cash rents on all types of farmland in the region increased by an average of about 15% from a year ago. That pace of gain was similar to the previous quarter and followed nearly a year of accelerating gains. Rents rose an average of about 1% from the previous quarter, the slowest increase since early 2021.

The growth in nonirrigated land values continues to outpace the rise in cash rents as both steadied from rapid gains in recent quarters, the bank notes. Nonirrigated farmland values increased about 35% since the beginning of 2019, an average of nearly 3% per quarter. Cash rental rates grew about 25% over that period, an average of about 2% per quarter.

Central Corn Belt farmland values rose 22% in the second quarter of 2022 from a year earlier, states the Federal Reserve Bank of Chicago. That gain roughly matches the year-over-year increases of the previous two quarters. Values for “good” agricultural land were up 2% in the second quarter of 2022 from the first quarter.

Twenty-five percent of the survey respondents forecast higher farmland values during the July through September period of 2022, and 4% forecast lower values; given the greater share of optimistic next-quarter projections reported by the previous six surveys, the results from the most recent survey suggest shrinking expectations for farmland values during the third quarter of 2022, the bank states.

Leading gains is Iowa with a 4% rise noted in the quarter compared to the first quarter and a 26% annual increase. Indiana notes a 1% quarterly gain and a 25% annual rise. Illinois reports no change in values versus the first quarter and an 18% annual increase. Wisconsin logs a 1% decline and an annual gain of 14%.

Similar gains are reported by the Federal Reserve Bank of Minneapolis. It says land values and cash rents grew further in the second quarter, following the trend of the past two year. It says district nonirrigated cropland values increased 20% on average from the second quarter of 2021. Ranchland and pastureland values also jumped, by nearly 21%, while irrigated cropland values increased 22%. The district average cash rent for nonirrigated land jumped by more than 16% from a year ago. Rents for irrigated land increased 22%, while ranchland rents increased 15%. Changes in land values and rents were generally consistent across district states, the bank states.

The Kansas City Federal Reserve Bank serves Kansas, western Missouri, Nebraska, Oklahoma and the mountain states of Colorado, northern New Mexico and Wyoming. The Chicago Federal Reserve bank serves the northern two-thirds of both Illinois and Indiana, all of Iowa, lower Michigan and the southeast Wisconsin. The Minneapolis Federal Reserve Bank serves the Dakotas, Minnesota, Montana and northwestern Wisconsin.

                   Easing Noted in Pace of Change in Plains Farmland Values

Chart of changes in farmland values in Plains
Federal Reserve Bank of Kansas City


                     Pace of Gains in Rising Cash Rents on the Plains Eases

Chart of changes in cash rents in Plains
Federal Reserve Bank of Kansas City


          Percent Quarterly (top) and Annual (bottom) Changes in Farmland Values

Map of percent changes in Corn Belt farmland prices
Federal Reserve Bank of Chicago



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