The value of good central Corn Belt agricultural land rose 6% through July 1 from the level of a year earlier, according to a survey conducted by the Federal Reserve Bank of Chicago. The Chicago Fed bank serves the northern two-thirds of Illinois and Indiana, all of Iowa, the lower peninsula of Michigan and southeastern Wisconsin.
Pacing the bank district’s gain was Iowa, which reported a gain of 8% from a year earlier. Illinois followed with an increase of 5% and Indiana posted a 4% boost. Wisconsin, however, reported values slipped 1% — a hold-over from the severe financial pressure experienced by the livestock industry.
However, the survey found values remained stable in the second quarter of 2010 compared to the first quarter — a finding confirmed by the recent survey conducted by the Illinois Society of Professional Farm Mangers and Rural Appraisers (see story on Page 1.)
The Fed bank noted land values rose by 1% in Illinois compared to the
previous quarter. Indiana and Iowa reported no change in the value of land versus the first quarter. Wisconsin, however, did report a 2% gain in values compared to the first quarter of 2010 — a glimmer of positive news for the stressed state and an indicator some liquidity has returned to the livestock industry.
"Location has been a major determinant for farmlandvalues this year, even more significant than quality at times," observes David B. Oppedahl, business economist with the Chicago Federal Reserve Bank who conducts the quarterly survey. "There have been reports of prices boosted by bidding between farmers for desired parcels of farmland.
However, higher quality land has tended to gain the most in value over the longer term."
Looking ahead, the survey found an equal number of bankers expected land values to rise during the third quarter of 2010 as those who thought values would decline. But
85% anticipated land values would remain unchanged compared to the previous quarter.
Timing is the key when you look at the chart of annual percentage changes in district land values. The chart above, based on year ending June 30, shows values down 3% in 2009. That’s due to the 4% and 1% declines recorded in the fourth quarter of 2008 and first quarter 2009, respectively.
But, as the year moves forward and that fourth quarter 2008 figure moves out of calculations, the chart picture changes. The Fed bank shows values rose 2% in 2009 on a calendar-year basis.