Farmland Values Surge 6% in Central Corn Belt

Posted on 02/11/2021 12:14 PM

Despite the lingering impacts of the Covid-19 pandemic, agricultural land values marked a 6% annual gain in the Federal Reserve Bank of Chicago district in 2020—the largest such gain since 2012. Moreover, values for “good” farmland in the district were up 4% in the fourth quarter of 2020 from the third quarter, according to agricultural bankers who responded to the quarterly survey. In addition 58% of survey respondents expect farmland values to rise during the January through March period of 2021; 42% expect them to be stable; notably; none expect them to decline, the bank notes.

On an annual basis, the value of "good" farmland rose 6% in Illinois, 9% in Indiana, 5% in Iowa, 4% in southeastern Wisconsin and 7% in the lower Peninsula of Michigan. On a quarterly basis, values increased 4% in Illinois, 2% in Indiana, 6% in Iowa, 7% in Michigan and 2% in Wisconsin.  

In addition to the strong gains in farmland values, positive changes in agricultural credit conditions occurred during the fourth quarter of 2020, the bank reports. In the final quarter of 2020, repayment rates for non-real-estate farm loans were higher than a year ago, and loan renewals and extensions were lower than a year earlier. Neither of these farm credit indicators had recorded year-over-year improvements since the third quarter of 2013. Meanwhile, non-real-estate farm loan demand relative to a year ago was lower for the second quarter in a row.

Even with inflation taken into account, district farmland values had an annual increase of almost 5% in 2020; this increase in real terms was the first one since 2013. In both real and nominal terms, district farmland values peaked in 2013. At the end of 2020, district farmland values were still down 9% from their peak in real terms, yet they were nearly back to it in nominal terms, the bank comments.

 

                               Percent Annual Change by Quarter

quarterly percent changes
Federal Reserve Bank of Chicago

 

                     Quarterly and Annual Percent Changes by Regions

Changes by region
Federal Reserve Bank of Chicago

                          Value of "Good" Farmland Over Time

Nominal and Inflation-adjusted farmland values over time
Federal Reserve Bank of Chicago

 

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