The farm economy has seen better days. The Federal Reserve Banks in Chicago, Kansas City, and St. Louis have released the results of their quarterly farm economy surveys.
One banker from Missouri explained the possibilities of buying will be tough on budgets.
“Corn yields are coming in exceptionally high, which will help everyone pay expenses,” he said. “However, I think there will be very little left to purchase land, machinery, and other equipment.”
The Kansas City District covers the Great Plains. The value of each type of farmland – irrigated, non-irrigated and ranchland – all fell more than 6 percent in the third quarter in comparison to a year ago.
The Kansas City Federal Reserve said this decrease was the sharpest year-over-year reduction in the district since the mid 1980s. Cash rents have decreased 10 percent in comparison to 2015.
Mississippi across the lower Midwest into Arkansas is covered by the St. Louis district. The area is under the same fiscal pressure, but farmland values were not hit as hard.
The St. Louis Federal Reserve Bank said quality farmland values were unchanged during the third quarter of 2016 compared to 2015. Ranchland increased in value by 1 percent, but cropland cash rents dropped 6 percent.
The Chicago Federal Reserve covers the primary corn-growing states, and district wide, farmland values are off 3 percent from 2015. Indiana and Wisconsin saw increases, but there are decreases in Illinois, Iowa and Michigan. Alone, Michigan values plummeted 11 percent.
The bankers who responded expect to see weaker demand to acquire farmland this fall and winter compared to 2015, particularly among farmers, but also nonfarm investors.
“Usually the ag lending season really starts to ramp up between now, harvest, and next spring’s planting,” said Howard Halderman of Halderman Farm Management and Real Estate. “I would anticipate probably the first quarter of ’17, if there are some concerns with ag lenders, they’re going to be talking to their customers and saying, ‘Maybe we need to correct something on the balance sheet and you need to sell something.’”