Land Wealth Plugs the Profit Gap

U.S. farmland is the savings account that is propping up ag borrowers today. Its stability is the mitigating factor keeping both borrowers and farm lenders in relatively good standing despite three back-to-back years of negative farm incomes, a growing number of ag economists and lenders say.  While some land experts forecast as much as a 25% to 30% drop from recent peak land values, most doubt a correction of that size would cause the kind of contagion that infected the farm economy in the 1980s. They believe safety valves are in place to keep any farmland distress to a minimum.  Crop and livestock incomes have plunged in unison this year, but "land values have been a blessing," University of Minnesota economist Dale Nordquist told ag bankers assembled in Indianapolis this week. He cited Minnesota Department of Revenue reporting a mere 1% drop in the state's farmland values over the past year. Likewise, when appraisers sorted through actual land sales in Farm Credit of Mid-America's four-state region at mid-year, they found real estate had barely budged from 2015 levels.