Farmland values have appeared to stabilize over the areas of the Tenth Federal Reserve District. The Kansas City Fed reported the results of their Quarterly Agricultural Credit Survey last week. During this past quarter, the district experienced increased values including:

• Nonirrigated farmland - .4%
• Irrigated farmland - 2.4%
• Pastureland - 1.5%

The Tenth Federal Reserve District includes Colorado, Kansas, Nebraska,Oklahoma, Wyoming, the northern half of New Mexico, and the western third of Missouri.

At the start of January this year, the national average of farmland was $2,100 per acre. Commodity prices experienced a drastic drop in the second half of 2008, causing concern. During the spring 2009 quarter, commodity prices rebounded to partially make up for their drop at the end of 2008. Since this year farmers are dealing with lower commodity prices, the USDA is expecting a 20% decrease in net farm income from last year.

Although commodity prices are lower compared to last year, commodity prices are still relatively high compared to historical prices. In the last 100 years, farmland has only decreased three times: during the Great Depression, the late 80's, and now at the end of 2008. Ag bankers are reporting strong balance sheets and say that the credit crunch is loosening, possibly bringing an end to tougher lending.  

Outlook

Farmland has a strong history of being a very safe, rewarding investment. Although farmland decreased in value in many areas of the US during the end of 2008, these Fed reports of increased values are great news. Farmland is once again appreciating. Now that land values seem to have stabilized, now appears to be a great time to invest in farmland. It will be interesting to see how farmland values conclude 2009.

-Colvin