Iowa farmland values fall year over year

Survey shows 6 percent decline from July 2015

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The value of an average acre of good Iowa farmland fell 6 percent from a year ago in the second quarter of 2016, according to a survey by the Federal Reserve Bank of Chicago.

On a quarterly basis, the value of an average acre of Iowa farmland was unchanged from April 1 to July 1, 2016.

Farmland values in the five-state Seventh Federal Reserve District — which includes Iowa — dipped 1 percent from July 1 to July 1, 2015. The value of an average acre of farmland rose 1 percent in the quarter from April 1 to July 1, 2016.

The Federal Reserve Bank survey does not include specific dollar values for farmland. The U.S. Department of Agriculture on Aug. 5 reported the value of an average acre of Iowa farmland slipped 2 percent to $8,000 in the first quarter of 2016 from $8,200 per acre in the same quarter of 2015.

Only 1 percent of the Federal Reserve Bank survey respondents expected farmland values to rise during the current quarter, while 48 percent expected them to move down and 51 percent expected them to be stable.

The bank surveyed 193 agricultural bankers.

David Oppedahl, Federal Reserve Bank of Chicago senior business economist, said in a news release that agricultural credit conditions in the second quarter of 2016 were weaker than a year ago.

“During the second quarter of 2016, repayment rates for farm loans softened relative to a year ago, but not by as much as during each of the prior two quarters,” Oppedahl said. “The portion of the district’s agricultural loan portfolio reported as having repayment problems was higher compared with a year ago.

“Yet, relative to six months ago, the share of loans with repayment problems was lower.”

Oppedahl said farm loans with major repayment problems accounted for 4 percent of the district loan portfolio, while those with severe repayment problems accounted for 1 percent of all loans.

Oppedahl attributed the year-over-year decline in district farmland values to lower prices for corn and soybeans and the resulting impact on farm incomes over the past two years.

The Iowa Chapter of Realtors Land Institute will release results of its latest farmland values survey on Sept. 14.

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