Farmland Values Continue Slump

Farmland Values Continue Slump

Bankers don't see turnaround in downward trend.

According to the latest AgLetter released by the Federal Reserve Bank of Chicago, farmland values for the third quarter of 2009 were 4% lower than a year ago in the Seventh District. However, there was an increase of 2% in the value of "good" agricultural land compared with the second quarter of 2009. These numbers are based on 225 replies by agricultural bankers to the October 1 survey.

According to the Federal Reserve report, there will be no turnaround in the downward trend for district land values. More of the responding bankers expected farmland values to slide rather than gain during the fourth quarter of 2009, through 69% expected stable values. Twenty-seven percent anticipated decreases and only 4% expect increased values.

The letter states, agricultural credit conditions in the third quarter were weaker than a year ago. Loan payment rates declined compared with the July through September period of 2008, whereas loan renewals and extensions rose. Farm operating and real estate loan interest rates were a bit lower. The banks' loan-to-deposit rations averaged 75.3%, the lowest level in over a year.

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