Ag land values hold steady (complete article from source)
Source: nptelegraph.com, by Steve Jordan
May 16, 2009
World-Herald News Service
OMAHA - Nebraska farmland values increased rapidly over the past three years, but now that's on pause, according to regional bankers.
The good news, according to Omaha Federal Reserve economist Brian Briggeman, is that the state's farmland is holding its value despite volatile agricultural markets and turmoil in the financial system.
"We saw such huge increases in 2008, it's encouraging to see that it's flat," said Briggeman, an economist with the Omaha branch of the Fed office in Kansas City, Mo.
Bankers from 255 institutions in a seven-state region provided data in the survey conducted by the Federal Reserve Bank of Kansas City. Those states are Nebraska, Wyoming, Colorado, Kansas, Oklahoma, northern New Mexico and western Missouri.
For the district as a whole, non-irrigated land values for the first quarter of 2009 were up 2.9 percent compared to last year, irrigated land values were up 3.8 percent and ranch land was unchanged.
2002, bankers said the average value of non-irrigated farmland and ranch land in Nebraska dropped compared with a year ago. Values of irrigated land were up only slightly.
However, over the past few years Nebraska land showed the biggest increases, according to the survey. In previous surveys since 2006, values have been up sharply, as high as 28 percent in one instance.
The bankers also said they expect farmers to be frugal with their spending this year. Purchases of equipment and land will be slow, even though interest rates are low, because of an uncertain outlook this year for farm revenue.
The strength of Nebraska's ag economy is important to the state as a whole. Economists have said that strong prices for farmland and grain shielded Nebraska from early effects of the recession last year.
Bankers in the latest Fed survey also said that overall credit conditions for agriculture tightened. Lenders increased collateral requirements, and the rate of loan repayment fell for the second straight quarter.
Credit conditions will further weaken this year, the bankers said, because of the economic situation in general and uncertain prices in the grain and livestock markets.
Prices for farmland of marginal quality declined the most because of limited buyer interest, the survey indicated.
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