Central Corn Belt farmland values rose 2% versus a year earlier in the second quarter of 2024, reports the Federal Reserve Bank of Chicago. That slim gain marks the smallest annual increase since the third quarter of 2020. Values for “good” agricultural land were flat in the second quarter relative to the first quarter, according to survey respondents from agricultural banks in Illinois, Indiana, Iowa, Michigan and Wisconsin.
Five percent of survey respondents expect district farmland values will rise during the third quarter, while 25% forecast lower values. The remaining 70% believe farmland values will be stable during the July through September period.
Not only was the 2% rise the smallest gain during the 15 most recent quarters of data, farmland values actually decreased 1% after adjusting for inflation. (Adjustment made with the Personal Consumption Expenditures Price Index, or PCEPI.) This was the first negative year-over-year change in real farmland values for the district since the first quarter of 2020.
Illinois posted a 3% rise versus a year earlier. Indiana rose 2%. But Iowa declined 3% versus year ago. Wisconsin, on the other hand, rose a sparkling 12% on an annual basis and was up 2% versus first quarter.
Bankers report agricultural credit conditions continued to show signs of softening in the district during the second quarter. Repayment rates for non-real-estate farm loans relative to a year ago remained lower. Only 4% of responding bankers note higher rates of loan repayment than a year ago; 19% note lower rates. The share of farm loans with “major” or “severe” repayment problems in was 2.2% in 2024, up somewhat from last year’s 1.3%. The share of farm loans with “no” repayment problems declined to 91.6% from its all-time peak of 94.5% a year ago. Renewals and extensions of non-real-estate farm loans during the second quarter of 2024 were higher than during the same period of a year earlier, as 25% of survey respondents report more of them and just 2% report fewer.
In the second quarter of 2024, demand for non-real-estate farm loans relative to a year ago was up for the third consecutive quarter. Some 29% of survey respondents saw demand for non-real-estate farm loans above the level of a year ago and 25% observed demand below that of a year ago. Over the first half of 2024, district banks originated more farm operating loans and fewer farm real estate loans than normal, according to responding bankers. Over the same period, bankers report Farm Credit System lenders, as well as merchants, dealers, and other input suppliers, lent more funds to the agricultural sector than normal, while life insurance companies lent slightly less.