Bankers continued to report higher farmland values this year, although the pace of appreciation slowed from the first quarter, reports the Federal Reserve Bank of Kansas City in its Agricultural Finance Databook.* What are farmland values in your area?
Drought conditions seemed to have little impact on farmland markets, according to the report. The strongest farmland value gains emerged in the central plains, where irrigation is prevalent, and the northern plains, where land-lease revenues from mineral rights continued to climb. For example, the positive percent change in farmland value from 2011 to 2012 in Iowa was 24 percent; North Dakota was 28.4 percent, Nebraska was 36.5 percent and Minnesota was 23.1 percent.
“Higher farm-loan volumes helped lift loan-to-deposit ratios off recent lows, and competition among agricultural lenders for qualified borrowers remained heated,” wrote the authors. “Effective interest rates inched lower as more loans were made with floating interest rates… Farm loan delinquency rates declined further and banks expected loan repayment rates to remain solid as high crop prices compensate for lower yields and crop insurance payments support farm income.”
Livestock Producers Face Challenges
Loans to livestock operations jumped as feed costs spiked due to the drought this year, noted the report. Poor grazing conditions and a shortage of forage forced many livestock and dairy operators to liquidate herds, boosting the number of cattle on feed above year-ago levels. Higher fuel costs to power irrigation systems and harvest crops also increased lending to crop producers.
The entire report contains more information on lending trends and farmland values. With higher land values, it’s more important than ever to maximize the return on your operation. Case IH helps you Be Ready to get the most from your equipment with agronomically-engineered solutions.
* The Agricultural Finance Databook, National Trends in Farm Lending report entitled, “Farm Lending Rises with Higher Production Costs,” was written by Jason Henderson, Omaha Branch Executive, and Maria Akers, Associate Economist. Both are with the Federal Reserve Bank of Kansas City. The full article can be found at: www.kansascityfed.org/research/indicatorsdata.
