News

Chicago Fed survey reflects tightening farm economy

Farmland values in the Seventh Federal Reserve District—the Chicago district—dropped another one percent in the fourth quarter of 2015 and were off three percent for the year.

The Chicago Fed’s quarterly survey of bankers shows that, in the fourth quarter, Illinois, Indiana and Iowa all experienced declines in agricultural land values, whereas Wisconsin and Michigan each experienced a small rise. (Individual states are listed below.)

The survey also indicates that ag credit con­ditions in the district continued to regress in the fourth quarter. Bankers reported repayment rates on non-real-estate farm loans were much lower in the October through December timeframe versus the same period of 2014, and higher rates of loan renewals and extensions reflected a tightened credit environment.

Survey respondents said that, for 2016, nearly two percent of farm loan customers were not expected to qual­ify for additional operating credit at their banks.

No improvements in the short-term prospects of the farm sector were anticipated by the survey respondents.  The bankers noted that controlling costs and utilizing risk-management tools would be critical to the health of farms in the coming year.

*Illinois farmland values were down one percent in the fourth quarter and down four percent for the year

*Indiana farmland values were down two percent in the fourth quarter and down four percent for the year

*Iowa farmland values were down three percent in the fourth quarter and down five percent for the year

*Michigan farmland values were up one percent in the fourth quarter and down two percent for the year

*Wisconsin farmland values were up two percent in the fourth quarter and up two percent for the year