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Stronger Farmland Values are Supporting the Farm Economy

Strength in farm real estate markets provided support to the agricultural sector amid ongoing financial challenges. 

The Tenth District Survey of Agricultural Credit Condition from the Federal Reserve of Kansas City says non-irrigated cropland values and cash rents increased slightly in the fourth quarter of last year. 

Cash rents had been dropping since 2017 but rose slightly at the end of last year. 

Credit conditions in the District remained weak but deteriorated at the slowest pace in more than four years. 

Despite some signs of stabilization, geographic disparities persisted across the region. Land values were stronger on the eastern side of the District, while farm income and credit conditions were weaker on the west side of the district. 

Lower interest rates and reduced borrowing costs may have contributed to recent strength in the District’s farmland values. 

Demand for farmland remained strong in the fourth quarter of 2019, which could also have supported farmland values. 

Bankers who responded to the survey said that trade relief payments provided notable support to farm finances in 2019, but many also indicated that underlying weaknesses in the sector continued to be driven by low agricultural commodity prices.

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