On Thursday May 20, 2009, the Federal Reserve Bank of Chicago released a report showing that farmland values had decreased by 6% in the first quarter of 2009, the largest decline in farmland values in the Midwest since 1985. For Reuter’s story click here. The Federal Reserve Bank of Chicago includes the Seventh District of the Federal Reserve and includes Illinois, Iowa, Indiana, Wisconsin and lower Michigan. According to Federal Reserve economist David Oppedahl,
[f]alling prices for crops hurt farmland values, and the deep U.S. recession also had an impact by cutting into demand for recreational land and rural housing[.]Although the report showed a huge decline, values where still 2% above a year ago at this time.
Agricultural cash rents did not decline for the first quarter of 2009, but posted the third largest quarterly increase since 1981. This increase is due to many farmers renting land before the decrease in crop prices. Finally, the report showed that interest rates charged to agricultural borrowers was still tracking at historical lows, but many farmers thought they would expect a higher demand for FSA guaranteed loans in the second quarter of 2009.
For more on this story, click here for an article in the Wall Street Journal.
To read the full report click here.
For recent blog posting a similar report from the Federal Reserve Bank of Kansas City, click here.
Posted: 05/22/09
