Fueled by sturdy farm revenue and low rates of interest, farmland values soared greater than 20% within the central Plains throughout 2021, in line with a quarterly survey of ag bankers by the Kansas Metropolis Federal Reserve Financial institution.
A majority of the lenders mentioned they anticipated values to extend this yr, however an equally giant quantity “additionally indicated that farmland values have been at the moment overvalued, suggesting there should be future dangers of declines,” mentioned the regional Fed.
It was one of many few notes of warning in the course of the fast run-up in land values within the Farm Belt.
“The latest energy in agricultural actual property markets has been supported by sturdy demand, traditionally low rates of interest, and vastly improved circumstances within the farm economic system,” mentioned the Kansas Metropolis Fed. “Lenders reported a largely favorable outlook for agriculture within the district however cited the rise in enter prices as a threat to the sector … The potential of weaker agricultural revenue and better rates of interest within the economic system stay as dangers for farmland markets.”
On common, the worth of nonirrigated farmland was up 24%, irrigated farmland up 22%, and ranchland up 22% within the Kansas Metropolis Fed’s district of Colorado, Kansas, Nebraska, Oklahoma, Wyoming, the northern half of New Mexico, and the jap third of Missouri.
“The mixture of extremely elevated grain costs, modest manufacturing prices in 2021, distinctive native crop yields, and robust liquidity from COVID-related packages has created ag wealth enchancment past any I’ve seen in my ag banking expertise of over 40 years and resulted in large appreciation in farm belongings,” mentioned a banker in northeast Kansas.
Agricultural bankers within the central Corn Belt reported a 22% enhance within the values of good-quality farmland throughout 2021, with the most important enhance, 30%, in Iowa, mentioned the Chicago Federal Reserve Financial institution final week.
Supply: Successful Farming
