Results from the latest survey of agricultural lenders in the Seventh Federal Reserve District show that higher commodity prices continued to drive up the value of farmland in the upper Midwest during the second quarter of 2011. According to the survey, farmland values between April through June were up 17 percent from a year ago; and the value of 'good' agricultural land during the three-month period was up four percent from the previous quarter. That represents the largest year-over-year increase since the 1970s.
Wisconsin ag property increased by eight percent from last year, which is the smallest increase in the five-state district, and went up four percent since the last quarter. Indiana values were the highest at 21-percent over last year and five percent more than the first quarter. Iowa, Illinois and Michigan also saw double-digit increases from 2010.
The reserve’s economist, David Oppedahl, says agricultural credit conditions were stronger in the second quarter of 2011 relative to a year earlier. But he noted that some bankers expressed concerns about the risks facing farmland markets, especially with regard to declines in crop prices.
The report showed that repayment rates for non real-estate farm loans were higher than a year ago, while renewals and extensions of these loans were lower. Bankers indicated that the index of non-real-estate agricultural loan demand fell to its lowest level since 1987. Funds availability for lending was up relative to the second quarter of 2010.