Farm income cools, land prices climb in northern Plains

From Successful Farming:

Cropland values rose by 7.2% in the northern Plains this summer, said agricultural bankers in a quarterly survey by the Minneapolis Federal Reserve Bank. Land values rose even as farm income declined from last summer, lenders said, due to high production costs and lower commodity prices, with a decline expected for this fall, too.

“The outlook for farm capital spending is also contractionary, while lenders expect household spending to flatten,” said the Minneapolis Fed. “More than a third of lenders expect loan demand to increase despite higher interest rates, likely as a result of the tightening cash positions of agricultural producers.”

While the value of unirrigated cropland rose by 7.2%, irrigated cropland surged by 12.8%, according to lenders. Ranch and pastureland values grew by 2.1%. Several bankers noted pressure behind rising land values, such as hunters seeking recreational land and investors purchasing tracts. A Montana banker said higher prices were “making it next to impossible for the next generation to purchase or even lease land to farm or raise livestock.”