Land values are being pushed down by low commodity prices, along with farmers' income, according to two recent reports by Federal Reserve Banks.
Both the Federal Reserve Bank of Kansas City, Mo., and the Federal Reserve Bank of St. Louis reported lower farmland value.
Lower commodity prices has weakened farm income, worsened credit conditions and pushed down the value of nonirrigated and irrigated cropland by 3%and 5%from a year ago, according to the Federal Reserve Bank of Kansas City in its August report.
Irrigated cropland values have declined in each of the past six quarters, while nonirrigated cropland values have declined in four of the past six quarters, the report found.
The drop in income also affected credit, with 15percent of bankers reportingthat they denied more than 10%of applications for farm operating loans.
Anotherreport by the Federal Reserve Bank of St. Louis also said farmland values had deteriorated. It reporteddeclining value for ranch and pastureland, which fell by 7.4%. Quality farmland value declined less than 1%, making it the fourth consecutive quarter of declining value, it said.
Agricultural land values are expected to decline again in the third quarter,the bank said, based on a survey of 32 agricultural banks in the Eighth Federal Reserve District.
The report found that the financial condition of farmers borrowing money deteriorated during the last year and said tenant farmers with cash-rental arrangements are most exposed to a prolonged downturn in income. It wasbased on a survey conducted from June 15 to June 30.