Farmland Values, Agricultural Prices, and Farm Income

An update on March 23rd from the Federal Reserve Bank of Minneapolis stated that, “Farm incomes and capital spending continued to decrease, according to lenders responding to the Minneapolis Fed’s fourth-quarter (January) agricultural credit conditions survey. “The rapid growth of farmland values and rents continued to decline from record levels of a few years ago.” The Minneapolis Fed also explained that, “Consistent with weak incomes, loan repayment rates decreased, while renewals ticked up.” And with respect to farmland values, the Fed report stated that, “As in other recent quarterly surveys, farmland values continued to decrease somewhat in the final three months of 2016, with cash rents following suit. Average land values and cash rents for nonirrigated land, irrigated land and ranchland all fell from the previous year districtwide. Nonirrigated farmland saw the biggest drop, with the district average value decreasing 5.4 percent, while rents fell 6.6 percent over last year. Decreases for irrigated farmland and ranchland were similar, with values down 4.3 percent and 5 percent, respectively, while rents fell 8.4 percent and 0.5 percent.”