2021 Farmland Values Rise Rapidly

Farmland values continued to increase at a rapid pace through the end of 2021, said two economists at the Federal Reserve Bank of Kansas City in a release.

Economists Francisco Scott and Ty Kreitman said, alongside sustained strength in farm income and credit conditions, the value of all types of farmland in the Tenth District was more than 20% higher than a year ago.  The strength was supported by strong demand, historically low interest rates and vastly improved conditions in the farm economy.




Lenders reported a mostly favorable outlook for agriculture in the District but cited the rise in input costs as a risk to the sector, the economists said.  Even with uncertainty around input costs, lenders expected favorable conditions in the economy to support farm finances and lead to further gains in farmland values in 2022.

The possibility of weaker agricultural income and higher interest rates remain as risks for farmland markets, they said.  Despite the risks, the agricultural sector appears to be well positioned for the year ahead, supported by strong balance sheets, high agricultural commodity prices and sharp gains in farmland values.




Strength in the agricultural economy continued to support farm income and borrower liquidity through the end of 2021, the release said.  Profit opportunities remained strong alongside elevated commodity prices, and farm income and borrower liquidity increased from a year ago at a pace similar to recent quarters.

Farm finances were expected to remain strong in the coming months, but improve at a slower pace, the Federal Reserve Bank said.

Alongside strong farm finances, loan repayment rates continued to increase, and demand for agricultural loans remained subdued, the economists said.  Similar to recent quarters, nearly half of respondents reported that farm loan repayment rates were higher than a year ago and only a fraction reported repayment was slower.

Demand for farm loans was nearly unchanged from a year ago throughout the region but, alongside the recent rise in production expenses, demand was expected to increase in coming months, the Bank said.




Interest rates on farm loans increased slightly from the previous quarter but remained historically low, they said.  The average rate charged on all types of loans increased from the previous quarter for the first time since early 2019.

Rates on all loan types were an average of five basis points higher than the previous quarter but remained around 100 points below the average from 2015 to 2019.




The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.55 to $140.75 per cwt, compared with last week’s range of $139.02 to $141.83.  FOB dressed steers and heifers went for $220.57 per cwt, versus $216.43 to $220.53.

The USDA choice cutout Monday was down $0.56 per cwt at $273.96, while select was up $0.92 at $268.75.  The choice/select spread narrowed to $5.21 from $6.96 with 61 loads of fabricated product and 15 loads of trimmings and grinds sold into the spot market.

The USDA reported that basis bids for corn from feeders in the Southern Plains were down $0.20 at $1.20 to $1.30 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.20 over Mar, which settled at $6.55 3/4 a bushel, up $0.04 ¾.

No new contracts were retendered for delivery against Feb on Monday.

The CME Feeder Cattle Index for the seven days ended Friday was $163.16 per cwt up $0.52.  This compares with Monday’s Mar contract settlement of $166.87 per cwt, up $0.65.