Farmland Values Are Up in Kansas City Region

The Federal Reserve Bank of Kansas City puts out a quarterly review of credit conditions in their region.  This region covers Kansas, Missouri, Nebraska, Oklahoma and most of the Mountain States.  I try to give you a recap when it comes out since the information is both timely and interesting.

The most recent report for the fourth quarter of 2009 showed that average farm values in the region were up about 3% over the same time in 2008.  Kansas, Missouri and Oklahoma showed more than a 3% increase, while Nebraska was only marginally higher and the Mountain States actually showed a price decrease.  This decrease was primarily due to the larger concentration of livestock operations in these states which have not fared well over the last few years.

The bank indicated the strength was due to two primary reasons:

• Rising farm income due to both stronger prices at year-end and higher yields, and
• Small supply of farmland available for sale

For the farmland that did sell, more of this went to other farmers rather than investors.  Residential development is almost at a standstill right now and the recession has put a crimp on people being able to buy farmland for recreational purposes.  Also, the bankers noted that more farmland was purchased for cash during the quarter.

Many of the bankers expect farmers to purchase more capital equipment during 2010 than in 2009.  Livestock prices did move higher during the quarter, but they remain slightly under break even levels.

With the price decreases in January, 2010, it will be interesting to see what the next report brings.