Farmland values across the Central and Southern Plains continue to decline, but at a modest pace, reports the Federal Reserve Bank of Kansas City. It's quarterly survey of ag bankers found the value of nonirrigated and irrigated cropland declined 3% and 6%, respectively, from the previous year. Although the magnitudes of recent declines have yet to approach the magnitudes of the 1980s, the duration of the recent downturn in cropland values has approached that of the 1980s, the bank notes. The value of ranchland also continued to soften in the third quarter at a modest pace.
Consistent with recent surveys, farmland values in the western third of the district continued to decrease at a slightly faster pace than in the east. The value of nonirrigated cropland in the western portion of the district decreased 5% in the third quarter, whereas values in the eastern portion were unchanged from a year ago. Although the pace of declines in the western portion of the district continued to moderate, the ongoing divergence between the two regions has remained, primarily due to production potential and differences in commodity concentrations.
Changes in farmland values also differed across district states. The value of farmland in western Missouri and Oklahoma generally increased in contrast to other district states. In addition, similar to recent developments in farm income, the pace of declines in farmland values also has softened throughout the district and in most states individually.
Farm income, repayment rates and farmland values declined from the previous year and were expected to decline further in the coming months. However, a larger share of bankers reported some improvement in the region’s agricultural economy. Going forward, agricultural economic conditions are still expected to remain subdued and financial stress in the farm sector may intensify further, but the sharp transition of recent years appears to be lessening.