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Historically low interest rates buoying farmland values

The impact of the pandemic on farmland values and credit is more evident in the latest quarterly report from the Chicago Fed.

Senior business economist David Oppedahl tells Brownfield while farmland values were fairly steady in the second quarter, ag credit is weakening, “As there were decreases in the repayment rates as well as decreases in renewals and extensions of agricultural lending on non-real estate loans.”

He says the decrease in non-real estate lending in the second quarter was potentially related to direct farmer payments from the government.

“Our reading on the percentage of the farm loan portfolio with major or severe repayment problems had increased to 8.3 percent, which was the highest level since 1988.”

Looking ahead to the third quarter, Oppedahl tells Brownfield farmland values are expected to remain stable partly supported by low interest rates which are the lowest in the history of the survey which began in the 1970s.