After years of rising values, the price of farmland saw a decline over the past year specifically in the Federal Reserve Ninth District. Joe Mahon, Regional Outreach director at the Federal Reserve Bank of Minneapolis, surveyed ag lenders in Minnesota, Wisconsin, Montana, Michigan and North Dakota.
“We saw a decline in the average price for an acre of non-irrigated farmland by just below 1% which is not that significant. And this is in year over year terms. We just asked them what the price, the prevailing price of an acre of good quality farmland is in their area, and we can look at the same respondents who responded in this quarter versus those who responded a year ago, and actually just compare those two. So this is an apples-to-apples comparison over time.”
Mahon said cash rents for production cropland followed suit.
“Now, the decline in cash rental rates is not something new. We’ve actually seen the last couple of years, we’ve seen kind of continued moderate growth in land values as cash rental rates have either kind of leveled out or contracted in some cases, in this case they’re actually moving in the same direction, and this is noteworthy because again land prices right now are historically high.”
Mahon said values are still at the highest rates since the 1980s.