Wisconsin Farmland Value Shifting Direction
Sunday, August 16th, 2020 -- 4:27 PM
After trending downward for most of the past year, the value of Wisconsin farmland is starting to shift in the other direction.Wisconsin Ag Connection says that according to the latest survey of agricultural lenders in the Seventh Federal Reserve District, ag property values in the five-state region were one percent higher than the same period in 2019, but remained unchanged between the months of April through June compared to the previous quarter. In the most recent questionnaire of 150 rural bankers, survey respondents noted that Wisconsin properties were also up one percent from last year, and rose three percent since the second quarter. Farmland in Iowa and Illinois were flat, while Indiana saw a four percent increase for the year. Michigan trends were not calculated due to the lack of adequate survey responses. "Given the widespread adverse effects of the pandemic in the second quarter of 2020, unsurprisingly agricultural credit conditions for the District weakened compared with a year earlier," said Reserve Economist David Oppedahl. "For the second quarter of 2020, repayment rates for non-real-estate farm loans were again lower than in the same quarter of the previous year. The portion of the District's agricultural loan portfolio reported as having major or severe repayment problems had not been higher in the second quarter of a year since 1988." In addition, renewals and extensions of non-real-estate farm loans in the region were up from a year ago. The bankers indicated that 97 percent of their lending areas were at least modestly affected by the COVID-19 pandemic in the first half of 2020, which had an even larger impact this year than the extreme weather events in 2019.
Meanwhile, Oppedahl explained that billions in government payments and a bountiful crop forecast for the coming year did boost confidence enough to reflect on the quarterly summery. "Farmland values seemed to benefit not only from the rebound in crop revenues and higher government payments, but also from lower nominal interest rates and a 'flight to safety' mentality spurred by the pandemic," he said. Looking ahead, bankers feed farmland values would be stable in the near term. The survey showed 79 percent of responding bankers projected no change in farmland values for the third quarter, while only one percent projected them to increase. They further expect volumes of non-real-estate farm loans to stay about the same in the coming months compared with year-earlier levels, although they expected volumes of operating loans and loans guaranteed by the Farm Service Agency to increase.
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