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Fed Survey: Wisconsin Farmland Values Trending Higher
Wisconsin Ag Connection - 11/16/2020

Despite the impact of the COVID-19 pandemic on commodity prices this year, most of the states within the Seventh Federal Reserve District saw their farmland rise in value during the third quarter of 2020 when compared to last year. According to the latest survey of agricultural lenders in the district, ag property values were two percent higher than the same time in 2019, but remained flat between the months of July through September from the quarter previous.

In the most recent questionnaire of 144 rural bankers, survey respondents noted that Wisconsin properties were up three percent from last year, and rose one percent since the second quarter. Iowa, Illinois and Indiana also saw an increase in year-to-yearvalues, but Illinois' quarterly value slipped during the summer month. Michigan trends were not calculated due to a lack of adequate survey responses.

"After a very challenging 2019, crop conditions in 2020 were better for most of the district," said Reserve Economist David Oppedahl. "The industry was also supported by lower interest rates, additional government payments, and some rising agricultural prices."

He says agricultural credit conditions were mixed during the third quarter of 2020, but the availability of funds for lending by agricultural banks was much higher. In addition, average interest rates on agricultural loans slid further lower during the quarter, which helped boost agricultural land values.

"Renewals and extensions of non-real-estate agricultural loans were higher in the third quarter than in the same quarter of 2019, with 27 percent of the responding bankers reporting more of them," Oppedahl noted. "As of October 1, the district's average interest rates on new operating loans, feeder cattle loans, and farm real estate loans had fallen to their lowest levels on record: 4.65 percent, 4.79 percent, and 4.24 percent, respectively."

Looking ahead, most of the survey respondents felt farmland values would continue to rise during the final quarter of the year for the first time since 2013. The majority of the bankers also expect farmers and non-farm investors to have stronger rather than weaker demand to acquire farmland this fall and winter compared with a year earlier.

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