Farmland values in Nebraska fall, reversing trend

After two years of steep increases, Nebraska farmland values fell in the third quarter from a year ago, according to regional bankers in a survey.

Compared with the same quarter a year ago, non-irrigated farmland values in Nebraska dropped 4.8 percent; irrigated farmland values fell 4.7 percent; and ranchland values declined 5.3 percent.

“After posting some of the steepest annual increases in farmland values over the last two years, Nebraska values have moderated somewhat in 2009,” said Brian Briggeman, an economist with the Federal Reserve Bank of Kansas City, Mo.

Bankers from 263 institutions in Nebraska, Wyoming, Colorado, Kansas, Oklahoma, northern New Mexico and western Missouri took part in the survey. For the seven-state district, farmland values overall appear to have reached a plateau since falling in the fourth quarter of 2008, he said.

For the region, farmland prices declined moderately. Compared with last year's third quarter peak, nonirrigated land values dipped 1.7 percent, irrigated land values were down 3 percent and ranchland values fell 4.2 percent.

Survey respondents reported a limited number of sales during the quarter, and a majority expected farmland values to hold steady over the next three months.

After two years of historically high farm incomes, the farm income index has followed a downward trend throughout 2009. In the third quarter, the farm income index was below 50, its lowest level since early 2003.

The capital spending index, which also reached a survey low, followed a similar track, as lower incomes further curtailed equipment purchases.

Farm credit conditions also eroded.

The third-quarter index of loan repayment rates fell further, reaching its lowest level since early 2003. And the index of loan renewals and extensions jumped to its highest level in six years.

Collateral requirements remained elevated in the third quarter but were little changed from the previous quarter and were expected to remain flat in coming months.

In response to a special survey question, the bankers, on average, estimated their livestock income would decline roughly 10 percent from year-ago levels. Bankers also reported that annual crop incomes would decline roughly 15 percent below year-ago levels due to lower pre-harvest crop prices, especially since many expected an excellent harvest.

Contact the writer:

444-1183, christine.laue@owh.com

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