Good Farmland in Iowa Down 7% Year-over-Year

The most recent AgLetter from the Federal Reserve Bank of Chicago indicated that good farm land in Iowa decreased about 7 percent from the third quarter of 2008.  The average decrease for the five state region was 4%.  The good news that the price of good farm land increased by 2% over the second quarter of 2009.

The forecast for the fourth quarter prices were an additional decrease in values, but not at a great rate.  Pockets of strength seem to exist in areas where farmers have built up financial capital over the last few good years.  These farmers are either expanding their farm operation or trying to reduce their exposure to hikes in cash rents.

On the financial side, loan repayment rates for non-real-estate loans fell to their lowest ranking since 2006.  The index had peaked in 2008 at 150 and fell to 89 in the third quarter which is about a 40% decrease in loan repayments.  Both real estate and operating loan rates were at very favorable being in the low 6% range for the quarter.

Bankers also did not see conditions improving into the fourth quarter and beyond.