Chicago Fed survey: Midwest farmland values rebound

CHICAGO — Farmland values increased 2% in the last quarter of 2025 and were up 6% year-over-year in the 7th Federal Reserve District.

The information, published in the Federal Reserve Bank of Chicago’s agricultural newsletter Feb. 12, is based on responses from 102 district agricultural bankers who completed the survey.

The Seventh District includes the northern two-thirds of Illinois and Indiana, all of Iowa, the southern two-thirds of Wisconsin and Michigan’s Lower Peninsula.

Indiana and Wisconsin had the highest year-over-year increases at 9%, Iowa was up 7% and Illinois saw a 3% increase from a year ago.

The trend is a reversal from 12 months ago when the Chicago Fed found the farmland values decreased in the “I” states, while Wisconsin was slightly higher from 2024 to 2025. There was no data from Michigan’s Lower Peninsula due to insufficient response.

During the last quarter of 2025, Iowa’s “good” farmland value increased 5%, Indiana was 3% higher, Wisconsin increased on average by 1% and Illinois had a 1% decline.

From 2014 through 2019, the yearly changes in district farmland values were somewhat negative to flat. In contrast, there were annual increases in farmland values from 2020 through 2025, except for in 2024, when there was a small decline.

The quarterly report, authored by David Oppedahl, policy adviser, and Elizabeth Kepner, business economist, also summarized survey findings related to current credit conditions and future expectations.

Credit Conditions

Agricultural credit conditions in the Chicago Federal Reserve District continued to deteriorate in the fourth quarter of 2025.

The share of the Seventh District’s farm loan portfolio assessed as having “major” or “severe” repayment problems was 5.6% in the fourth quarter of 2025 — the highest it’s been since the second quarter of 2020.

Repayment rates for non-real-estate farm loans were lower in the October through December period of 2025 compared with a year ago, and the renewals and extensions of these loans were higher.

In the final quarter of 2025, demand for non-real-estate farm loans relative to a year ago was up for the ninth consecutive quarter, while the availability of funds for agricultural lending relative to a year earlier was down for the 11th consecutive quarter.

At 79.6% in the fourth quarter of 2025, the district’s average loan-to-deposit ratio was higher than that of the previous 25 quarters — and over 2 percentage points lower than the level desired by responding bankers.

“Notably, 30% of survey respondents’ banks tightened their credit standards for farm loans in the fourth quarter of 2025 compared with a year earlier, while 69% of the respondents’ banks kept their credit standards essentially unchanged,” the report stated.

“With that said, 77% of responding bankers noted that their banks did not raise the amounts of collateral required for customers to qualify for non- real-estate farm loans during the final quarter of 2025 relative to a year ago, while 23% noted their banks required larger amounts.”

Agricultural interest rates edged down from the end of the third quarter to the end of the fourth quarter of 2025 and were last lower at the end of the third quarter of 2022.

Looking Forward

There were fewer responding bankers, at 7%, who projected agricultural land values to go up in the next quarter — in this case, the first quarter of 2026 — than those who projected them to go down, at 20%.

“Moreover, survey respondents at the start of 2026 decisively predicted capital expenditures by farmers would once again be lower in the year ahead than in the year just ended for land purchases or improvements, as well as for buildings and facilities, machinery and equipment, and trucks and autos,” Oppedahl and Kepner wrote.

“In addition, farm real estate loan volumes were narrowly forecasted to be smaller in the first three months of 2026 compared with the same three months of 2025. Nevertheless, non-real-estate loan volumes — specifically for operating loans, feeder cattle loans and loans guaranteed by the U.S. Department of Agriculture’s Farm Service Agency — were forecasted to be larger in the first three months of 2026 compared with the same three months of a year earlier.

“Over this time frame, lending for dairy, farm machinery and grain storage construction was expected to decline relative to a year ago.”

According to survey respondents at the beginning of 2026, 3.8% of their farm customers with operating credit in the year just past were not likely to qualify for new operating credit in the year ahead — above the survey’s level at the start of 2025.

This survey result, combined with the rise in loans with repayment problems and somewhat tighter credit standards, suggests district agricultural credit conditions may deteriorate further in the year ahead.

As a banker from Illinois commented, “2026 is going to be a challenge for many producers with higher input prices.”

Yet, the outlook still offers some hope for Midwest farmers, particularly given stronger farmland values, government support of farm operations and lower recent agricultural interest rates.