The value of "good" farmland and cash rents declined through the first quarter of 2016, according to the Federal Reserve Bank of Chicago. The bank's quarterly survey indicates farmland values slipped another 1% during the quarter, compared to the previous quarter, and declined 4% when compared to a year earlier. Bank Senior Business Economist David Oppedahl says the 4% annual decrease is the largest since the third quarter of 2009.
Cash rental rates for district farmland experienced a significant drop of 10% for 2016 compared with 2015 — even larger than the decrease of last year relative to 2014, he says.
Demand to purchase agricultural land was markedly lower in the three- to six-month period ending with March 2016 compared with the same period ending with March 2015. Moreover, the amount of farmland for sale, the number of farms sold, and the amount of acreage sold were all down during the winter and early spring of 2016 compared with a year ago, the survey indicates. Nearly two-thirds of the responding bankers expected farmland values to decrease during the second quarter of 2016, with the rest expecting farmland values to remain stable.
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