Notes: This chart shows the average annual change in farmland values for the Seventh District, using data from the Chicago Fed's Land Value and Credit Conditions Survey. Farmland values account for a significant part of farm sector asset values and equity. As such, the movement in farmland values is an important indicator of agriculture's economic health. Farmland values have an impact on the owner's ability to borrow and on the quality of a bank's loan portfolio, since they affect the borrower's financial position as well as the bank's collateral. Farmland values rose rapidly in the 1970s, partly due to inflation, and then crashed in the 1980s. Many farmers experienced financial difficulties at that time because both income and farmland values dropped.
Source: Land Value and Credit Conditions Survey, Federal Reserve Bank of Chicago.