The outlook for farmland values and interest rates

 the last four years, farm real estate markets have faced pressure due to low commodity prices and deteriorating farm income. From 2013 to 2018, farm income in the United States declined more than 50 percent, and working capital declined 65 percent. Despite these developments, the Federal Reserve Bank of Kansas City’s Survey of Agricultural Credit Conditions shows farmland values remained relatively stable, declining only modestly in most areas. Indeed, Chart 1 shows that in the Tenth District, cropland values declined only 16 percent from 2013 to 2018. Farmland values in other states across the Midwest and Great Plains declined by similarly modest amounts over this period.Although farm real estate markets have been relatively stable amid significant declines in commodity prices and farm income, risks of further declines in farmland values appear to have increased. A recent increase in farmland sales in some states also suggests a decline in farmland values could be on the horizon.