The Federal Reserve’s 7th district, encompassing Illinois, Indiana, Iowa, Michigan and Wisconsin saw agricultural land values rise 22% over the course of 2021 with parts of Iowa seeing rises up to 34%, according to the latest data from the Chicago Fed. This marked the largest such increase since 2011.
Land values were pushed higher by an increase in corn and soybean revenues, as well as improved credit conditions for farmers. Both increased yield and higher prices contributed significantly to revenues, increasing 29% for corn and 30% for soybeans year-over-year in 2021.
Other agricultural products also saw significant price rises with prices for hogs up 14%, for cattle up 27%, for milk up 19% and eggs up 86%.
According to the reserve bank negative real interest rates seemed to spur demand for agricultural land with better repayment prospects also contributing towards a favorable lending environment.
A majority of 56% of bankers responding to the Chicago Fed’s survey predicted that farmland values would increase in 1Q22.