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Farmland Values and Credit Conditions
AUGUST 21, 2013 By: News Release CHICAGO–Acording to the latest AgLetter published by the Federal Reserve Bank of Chicago, for the second quarter of 2013, “good” farmland values were up 17 percent from a year ago in the Seventh Federal Reserve District, which consists of Illinois, Indiana, Iowa, Michigan and Wisconsin. However, agricultural land values registered no gain in the second quarter relative to the first quarter of 2013, according to a survey of 211 agricultural bankers. The last time there was no quarterly increase in agricultural land values was in 2009. Generally, the stellar year-over-year gains in farmland values across the five District states masked the comparative weakness of the quarterly results. Moreover, the percentage of survey respondents anticipating farmland values to fall during the third quarter of 2013 was the same as the percentage predicting them to rise (7 percent); 86 percent of responding bankers expected farmland values to be stable. The District’s agricultural credit conditions were generally better in the second quarter of 2013 than a year earlier. The availability of funds for lending by agricultural banks was up relative to a year ago; the banks’ deposits were enhanced not only by high crop prices but also by payments for insured losses due to last year’s drought. Repayment rates for non-real-estate farm loans were higher than a year ago, with 94 percent of the respondents’ agricultural loan portfolio having no significant repayment problems. Renewals and extensions of non-real-estate farm loans declined from the level of a year earlier. The responding bankers perceived that non-real-estate loan demand for the April through June period of 2013 was below that for the same period last year. For the second quarter of 2013, the District’s average loan-to-deposit ratio edged up to 64.6 percent—12.6 percentage points below the average level desired by survey respondents. Finally, interest rates on farm loans rose for the first time since early 2011. Looking forward Crop producers will face tighter cash flows as their revenues decline (especially if crop prices slide further). Yet, the responding bankers did not expect agricultural loan volumes to rise for the July through September period of 2013 relative to the same period last year. In fact, some categories, including operating loans and livestock loans, were anticipated to shrink in the third quarter of 2013 relative to their levels in the same quarter of 2012, according to the survey respondents. Falling crop prices should bring relief to livestock producers, whose profits have suffered on account of the high feed costs in recent years. Continue reading
Farm Managers See More Stable Farmland Prices
SEPTEMBER 12, 2013 Continue reading
Farm Land Values Still On The Rise
By Todd C. Elliott todd.elliott@eunicetoday.com Louisiana is following the trend up when it comes to farm land values. Mike Strain, commissioner of agriculture and forestry, said that soaring land values determined by a survey conducted by the Federal Reserve’s Eighth District of its members’ agricultural lenders should mirror Louisiana’s quality farmland value with an increase in value for the third quarter of 2013. “Louisiana land values are following the trend,” said Strain, citing a Delta Farm Press article on how farmland values rose in the second quarter of 2013. “In the next 50 years, we will need every acre available for agriculture. It will be far more economically viable as productive farmland (instead of being developed into something else). Just look at the prices of farm land today. From 6-20 thousand dollars an acre already.” According to the Agricultural Finance Monitor – which is a published report from the Federal Reserve Bank of St. Louis – quality farmland prices average $5,672 per acre in the second quarter of 2013 in that district. The latest average shows a value growth of more than 20 percent since the start of 2013. Strain said that even though Louisiana is listed in the Federal Reserve’s Eleventh District and the Federal Reserve’s Sixth District, the findings and speculations of the Eight District – which is the Midwest states including Arkansas and parts of Mississippi, Tennessee, Kentucky and Missouri – should ring true for Louisiana. “With rising farm values, both in crop value and net farm equity, further reflected in the value of land, what we now see is an ever-increasing desire to hold onto the land and increase production,” said Strain. “Furthermore, I believe land values will continue to increase relative to the value of its agricultural productivity.” Whether land is more valuable in its traditional agricultural use or in development for housing or other enterprises is a question owners will continue to wrestle with. According to recently published statistics from the Farmland Information Center website, Louisiana is seeing a rise in farms state wide. In 1997, there were 30,425 farms in the state. It dropped to 27,413 in 2002 only to rise to 30,106 farms reported in 2007. With the number of rising farm totals, there is a rise in the number of farm acreage, according to farmlandinfo.org. Much like the statistics for the number of farms, Louisiana farms saw a total of more than 8.3 million acres in 1997– which saw a dip to nearly 7.8 million acres in 2002 before rising to more than 8.1 million acres reported in 2007. The bottom line value of the land and the farms saw a significant increase in the amount of Louisiana agricultural products sold. With more than $2.1 billion in agricultural products reported sold in 1997, the 2002 numbers drop to more than $1.8 billion before climbing to more than $2.6 billion reported in 2007. Read more: EuniceToday.com – Farm land values still on the rise Continue reading
