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Wisconsin Farmland Values Rose Just Two Percent in 2013
Wisconsin Ag Connection - 02/17/2014

Local bankers throughout the Midwest are indicating that 2013 saw a major slowdown in the recent thrust in farmland property values--especially in Wisconsin and Iowa where credit conditions are beginning to deteriorate. According to the latest survey of agricultural lenders in the Seventh Federal Reserve District, farmland values between October through December 2013 were up just three percent from the three months previous. For the year as a whole, values were five-percent higher in the district. That number was over 16-percent during 2012.

In the most recent questionnaire of 186 rural bankers, survey respondents said farmers in the region saw corn and soybean prices tumble from a year ago.

"Agricultural credit conditions weakened in the fourth quarter of 2013 compared with the fourth quarter of 2012," said Reserve Economist David Oppedahl. "In the fourth quarter of 2013, non-real-estate loan demand picked up from a year ago--which last occurred in the fourth quarter of 2010, as farmers had relatively more working capital during the intervening quarters. Funds available for lending remained above the level of a year ago. Also, agricultural interest rates continued to inch up in the fourth quarter of 2013."

Wisconsin ag property increased by two-percent from last year and was actually one-percent lower from the previous quarter. In 2012, the Badger State's annual increase was over 11-percent; and 22-percent higher during 2011. The survey also notes that Iowa values fell one percent for the quarter and was two-percent less compared to a year ago after that state suffered severe drought damage. But Illinois and Indiana saw single-digit increases for the quarter, and double-digit gains for the year.

Oppedahl explains that the district's crop production increased 36 percent for corn and 8.4 percent for soybeans relative to 2012 levels, causing farm-paid prices to slip.

"The rebound in agricultural production for the United States in 2013 led to the largest corn crop and the third-largest soybean crop on record," he said. "The resurgence in the supply of farm products contributed to declines in crop prices. Corn, soybean, and wheat prices for the fourth quarter of 2013 were lower, on average, by 35 percent, 11 percent, and 18 percent, respectively, than their prices of a year ago."

For 2012, $7.68 billion in crop insurance indemnities were paid out among the district's five states. As of late January 2014, $2.22 billion had been paid out for insured 2013 agricultural losses in the same areas.

Meanwhile, a majority of responding bankers anticipated farmland values to remain stable during the first quarter of 2014. Others expect decreases in farmland values during this period.

The bankers say over one percent of their farm customers with operating credit in 2013 were not likely to qualify for new operating credit in 2014. In Wisconsin, over three percent were unlikely to qualify again. Survey respondents also anticipate non-real-estate agricultural loan volumes to be higher in the first quarter of 2014 than in the same quarter of 2013.

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