In the Seventh Federal Reserve District, "good" ag land remained unchanged in value year-over-year while other ag land values dropped 3%. Michigan and Iowa experienced the biggest decreases of value at -5% while Illinois and Wisconsin experienced -2%. Indiana's ag land values were able to remain steady.

Land values decreased because of weak commodity prices compared to the record levels of 2008. The price of corn is 37% lower this year than last, but virtually the same price as in 2007. Soybeans are 23% lower than last year. These lower prices and continued high input costs are resulting in lower expectations for farm incomes.

Credit availability worsened over the past quarter according to the survey. Repayment rates dropped from April to June of this year compared to 2008. Wisconsin's dairy sector is struggling, and 55% of respondents from Wisconsin noted lower loan repayment rates because of this. The rate of "major" or "severe" loan repayment problems doubled from 2% to 4% year over year in the district as well.

Demand for loans continued to fall, in exception to loans from Farm Credit Services. FCS's loan market continued to grow from the first quarter of 2009 and is expected to continue this growth trend.

It is positive news to see that "good" ag land values remain unchanged in the Seventh District. While land prices appeared to have leveled off, we believe it is only a matter of time before they increase.

- Colvin