Wisconsin Ag Connection - Bank Survey: WI Farmland Values Rose During 2nd Quarter

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Bank Survey: WI Farmland Values Rose During 2nd Quarter
Wisconsin Ag Connection - 08/14/2017

For the first time in three years, the value of Midwest farmland began to move back up, with Wisconsin properties being right in the mix. According to the latest survey of agricultural lenders in the Seventh Federal Reserve District, state farmland values between April through June were up one percent from a year ago, and rose one percent above the previous quarter. Districtwide, land values also increased one percent from the same three months compared to last year, and moved up one percent from the first quarter of 2017.

For the past eight consecutive quarters, Wisconsin properties have been elevating, while other states began to drop. But the latest questionnaire of 186 rural bankers showed that Iowa, Indiana and Michigan also had a stronger quarter--though Illinois and Indiana experienced year-over-year decreases.

"District farmland values seemed to stabilize in the first half of 2017, despite lower prices for corn and soybeans relative to a year ago," said Reserve Economist David Oppedahl. "Moreover, 76 percent of survey respondents expected agricultural land values to be stable during the third quarter of 2017, while two percent expected them to increase and 22 percent expected them to decrease."

Oppedahl notes that loan renewals and extensions of non-real-estate farm loans continued to increase from last year as producers try to stay afloat in a struggling ag economy. Interest rates for real estate, feeder cattle and operating loans shifted upward in the second quarter after the fed raised interest rates earlier in the year.

"While agricultural credit conditions in the second quarter of 2017 again deteriorated relative to 12 months ago, they seemed to do so more slowly than in recent quarters," he said. "Repayment rates for non-real-estate farm loans relative to a year ago were still down during the second quarter of 2017, but less so than in the first quarter."

Looking ahead, the bankers indicated that agricultural land values will likely stay at current levels or decline a bit in the third quarter. Three out of every four bankers felt agricultural land values would be stable, while 22 percent projected them to decrease.

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