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Fed Survey: Wisconsin Farmland Values Rose in 2017
Wisconsin Ag Connection - 02/16/2018

For the fourth year in a row, Wisconsin kept up with 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, regional farmland values were flat between October through December 2017 compared to the three months prior; but rose one percent for the year as a whole.

Wisconsin ag property increased two-percent from the previous quarter, and was up two-percent since last year. The Badger State was the only state to see an increase in values during the fourth quarter; and has been trending up at two- to three-percent per year for each of the past five years.

The survey further noted that Indiana and Iowa values went up in 2017, while Illinois farmland went down. Michigan figures were not able to be tabulated due to a lack of response.

In the most recent questionnaire of 185 rural bankers, survey respondents felt that the productivity of district farmland helped stabilize the value of agricultural ground over the past 12 months.

"Based on calculations using USDA data, the district states' corn yield set a record of 193 bushels per acre in 2017, edging up one percent from 2016," said Reserve Economist David Oppedahl. "However, the soybean yield dipped 5.7 percent in 2017 from 2016. [And] farmers increased the acreage planted with soybeans by five percent, which compensated for the dip in yield."

Oppedahl goes on to say that 75 percent of the survey respondents expected farmland values to be stable during the first quarter of of 2018.

Meanwhile, non-real-estate farm loan renewals and extensions in the fourth quarter of 2017 were higher than the same three months in 2016. Additionally, the share of the farm loan portfolio deemed to have major or severe repayment problems edged up to 6.1 percent in the fourth quarter, which is the highest such share since the early 2000s.

"District states saw a continuation in the tightening of credit standards relative to a year ago, as 46 percent of the survey respondents reported their banks tightened credit standards for agricultural loans in the fourth quarter of 2017 relative to the fourth quarter of 2016 and 54 percent reported their banks kept credit standards essentially unchanged," Oppedahl said.

Looking ahead, most banks predict that farmland values will be stable through the spring of the year, while 23 percent expected them to decline. Bankers anticipated capital expenditures by farmers to be lower in the year ahead compared with 2017.

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