Dave Fendrich (walking) helps Bryant Hofer (in combine) harvest a field of corn on October 2, 2013, near Salem, South Dakota. (Scott Olson/Getty Images)
Good crops and higher commodity prices are putting more money in farmers’ pockets while agricultural land values are soaring, according to a new multi-state survey by the Minneapolis Federal Reserve.
The survey compares agricultural credit conditions from July to September of this year with the same period last year in South Dakota, North Dakota, Minnesota, Wisconsin and Montana.
Seventy-three percent of agricultural lenders surveyed said farm incomes increased during the period compared to a year earlier, while another 19 percent reported no change.
The report said increased incomes are helping farmers pay off their loans at a faster pace, even as interest rates rise. Almost half of the ag lenders in the survey are reporting lower demand for loans relative to a year ago, although 27 percent noted increased loan demand.
Spending on farm equipment and household purchases also increased.
Land values continued to increase despite interest rates on loans for land increasing substantially. Non-irrigated cropland values increased by 20 percent on average from the third quarter of 2021, the report says. Values for irrigated land increased by 15 percent, while ranchland and pastureland values increased almost 20 percent.
Land rents followed suit. The average cash rent for cropland increased by about 12 percent from a year ago, while ranchland rents jumped 4 percent.
Despite impacts of ongoing drought, the outlook for the fourth quarter is moderately optimistic, according to the Minneapolis Fed, with lenders in the district mostly expecting farm incomes to continue increasing.
The Fed points to the strong cash position and the moderate spending of operators. However, respondents continued to report concerns about soaring input costs.
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