States in the Seventh Federal District Saw Farmland Rise

Saturday, November 12th, 2022 -- 8:10 AM

(Wisconsin Ag Connection) All of the states within the Seventh Federal Reserve District saw their farmland rise in value by double-digits again during the third quarter of 2022 when compared to last year.

However, according to the Wisconsin Ag Connection, Wisconsin was the only state in the region that saw values soften during the previous three months. According to the latest survey of agricultural lenders in the district, ag property values were 20 percent higher than the same period in 2021, the largest such gain in more than a decade.

They also rose by four percent between the months of July through October over the previous quarter. In the most recent questionnaire of 160 rural bankers, survey respondents noted that Wisconsin properties were up 12 percent over last year, but were three percent lower from the second quarter.

Farmland in Iowa, Illinois and Indiana were 22 percent, 20 percent, and 29 percent higher, respectively. Michigan trends were not calculated due to the lack of adequate survey responses.

"In the third quarter of 2022, the district saw weaker demand for non-real-estate farm loans relative to a year ago, marking the ninth consecutive quarter of such softer demand," said Reserve Economist David Oppedahl. "The availability of funds for lending by agricultural banks was lower than a year ago for the first time since the second quarter of 2019."

Oppedahl points out that despite average interest rates going up sharply, agricultural credit conditions within the district were better in the third quarter of 2022 than a year earlier.

"Farmers also had a good year for income. Even though planting delays in the spring and drought over the summer lowered crop potential, 2022 turned out to be another strong production year," he noted.

Looking ahead, more than two-thirds of the bankers anticipated farmland values to remain the same in the final quarter of this year, while 25 percent anticipated them to rise.

The survey respondents who expected farmers and non-farm investors to have stronger demand to acquire farmland this fall and winter compared with a year earlier outnumbered the respondents who expected these groups to have weaker demand.

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