AgLetter: February 1999
Our survey of 360 agricultural bankers indicated that farmland values held steady, on average, during the fourth quarter of 1998 in the Seventh Federal Reserve District. District farmland values rose 1 percent for all of 1998, as weakness during the second half offset the gains registered earlier in the year. This is the smallest calendar-year increase since 1991 and comes on the heels of two consecutive annual 10-percent gains. However, these averages mask sharply divergent trends among the individual District states. In addition, the demand for new farm loans increased modestly from a year earlier, as did available funding for new farm loans. Interest rates registered a slight decline, but farm loan repayment rates continued to show weakness. As a result, bankers indicated that the quality of their agricultural loan portfolios declined. Furthermore, bankers reported that credit conditions were worse in Illinois, Indiana, and Iowa than in either Michigan or Wisconsin.