On Thursday, Wall Street Journal writer Jesse Newman reported that, “The price of farmland dropped across much of the Farm Belt in the second quarter, Federal Reserve reports showed on Thursday, as the global commodity rout weighs on crop prices and farmers’ incomes.
“Prices for good farmland in the Federal Reserve Bank of Chicago’s district, including Illinois and Iowa, fell 1% from a year earlier. In the Kansas City Fed’s district, which includes Kansas, Nebraska and western Missouri, irrigated farmland prices slid 5% compared with year-ago levels and the value of nonirrigated land fell 3%. The St. Louis Fed’s district, which includes parts of Indiana and Illinois, saw the average price of ‘quality’ farmland slip 0.7% from last year.”
Graph from the Federal Reserve Bank of Chicago showing a recent decline in farmland values.
Ms. Newman added in her Journal article that, “Falling land prices point to a continued downdraft in the U.S. agricultural sector after a yearslong boom that drove up crop and farmland prices earlier this decade. Since 2013, U.S. growers have raised bumper corn and soybean crops, helping spur a multiyear slump in commodity prices and contributing to a steep slide in farm incomes. Despite a spring rally in agricultural markets, farmers are on track for their least prosperous year since 2002, with crop prices expected to remain low thanks to benevolent weather that fueled expectations for record harvests this year.”
Recall that recent data from the U.S. Department of Agriculture also pointed to lower farmland values across the country, including Illinois.
Christopher Doering reported last week at the Des Moines Register Online that, “Farmland values and rents paid by producers have fallen in Iowa, but some in agriculture say the decline isn’t big enough to help farmers deal with low commodity prices.
“The Agriculture Department estimated the average price for cropland in Iowa in 2016 at $8,000 an acre, down $200 from a year ago and down $750 from 2014. Farmers renting land in the state are paying $235 an acre, down $15 from 2015, the government found.
“Similar declines have taken place across the country. But the gradual drop in land costs and rents hasn’t been steep enough to compensate for the prolonged downturn in corn, soybean and livestock prices, which have many producers struggling to cover production costs.”
