Fed Survey: Wisconsin Farmland Values Were Steady in 2018

Wisconsin Ag Connection - After trending upward at two- to three-percent annually for about five years, the value of Wisconsin farmland remained flat during 2018, and actually dropped in value during the fourth quarter. According to the latest survey of agricultural lenders in the Seventh Federal Reserve District, regional farmland prices were also unchanged for the year, but rose one-percent during the final three months because of strong sales in Indiana.

In the most recent questionnaire of 183 rural bankers, survey respondents felt that deteriorating ag credit conditions continued to affect the district in the fourth quarter--forcing repayment rates on non-real-estate farm loans to go down.

"For the fourth quarter of 2018, there were no year-over-year changes in agricultural land values in Illinois, Indiana, and Wisconsin; Iowa's farmland values moved down from a year earlier, while Michigan's apparently moved up," said Reserve Economist David Oppedahl. "This was the fifth straight annual real decline in district farmland values--the longest downturn since the 1980s."

Oppedahl notes that about 2.4 percent of current agricultural borrowers were not likely to qualify for operating credit at the survey respondents' banks in 2019 as in 2018. For those who can borrow money, interest rates have increased by late 2018 to levels not seen since 2010 and 2011.

Meanwhile, dairy farm owners are continuing to struggle. One Wisconsin banker said financial stress and the tough January weather are causing many producers to consider selling out.

Looking ahead, most banks predict farmland values to be stable in the first quarter of 2019, while 24 percent expected them to decline. If that happens, district ag land values are likely to be little changed in the first three months of the year.

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