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KC FED REPORTS GROWTH IN FARMLAND VALUES SLOWS AMID HIGHER INTEREST RATES
Mar. 10, 2023
Source: Federal Reserve Bank of Kansas City
Farm real estate values increased considerably in 2022 but showed signs of softening during the final months of 2022 as interest rates rose sharply. Interest rates on farm loans jumped to decade highs alongside increases in the federal funds rate.
While the value of most types of farmland continued to rise, the increase was the slowest since early 2021. Agricultural credit conditions remained strong in the fourth quarter and continued to be bolstered by broad strength in the farm economy throughout 2022.
The outlook for agricultural credit conditions looking ahead into 2023 also remained generally positive, despite some ongoing concerns. Elevated commodity prices continued to support profit opportunities for many producers across the farm sector, but concerns about operating expenses, higher interest rates and intense drought persisted.
While improvement in farm income and credit conditions has softened slightly in recent months, farm finances remained strong following especially strong agricultural economic conditions the past two years.
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