Chicago Fed survey: Midwest farmland values dip slightly

CHICAGO — The Seventh Federal Reserve District’s “good” farmland values increased 3% year over year, but dipped 1% over the last two quarters on average.

The information, published in the Federal Reserve Bank of Chicago’s AgLetter on May 14, is based on responses from commercial banks and Farm Credit System institutions located in the Seventh District. All results prior to the first quarter of 2026 were based on survey responses from commercial banks only.

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.

“Good” farmland is defined as agricultural land that is of high quality and productivity.

Indiana and Wisconsin continued to lead the way with year-over-year increases of 8% and 7%, respectively, while Iowa was up 2% and Illinois fell by 2% from April 1, 2025, to April 1, 2026.

Indiana farmland values from Jan. 1, 2026, to April 1 declined by 2%, Illinois dropped 1% and Iowa and Wisconsin had no change. There was no data from Michigan’s Lower Peninsula due to insufficient response.

Trend Comparison

That same farmland values trend for Indiana and Wisconsin was also reflected in the report for the last quarter of 2025 where both states saw a 9% year-over-year increase.

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.

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.

Farmland Demand

Demand to purchase farmland was lower in the three- to six-month period ending with March 2026 than in the same period ending with March 2025.

Eleven percent of survey respondents reported higher demand to purchase farmland and 22% reported lower demand.

Also, the amount of farmland for sale was down during the winter and early spring of 2026 compared with a year earlier. Likewise, the number of farms and the amount of acreage sold were down in the winter and early spring of 2026 relative to a year ago.

Credit Conditions

Agricultural credit conditions in the Seventh District weakened during the first quarter of 2026. Repayment rates for non-real-estate farm loans were lower in the January through March period of 2026 compared with a year ago, and the renewals and extensions of these loans were higher.

In the first quarter of 2026, demand for non-real-estate farm loans relative to a year ago was up for the 10th consecutive quarter, while the availability of funds for agricultural lending relative to a year earlier was down for the 12th consecutive quarter.

At 79.8%, the average loan-to-deposit ratio in the first quarter of 2026 was up a bit from the previous quarter and was nearly 3% below the average level desired by responding lenders.

The amount of collateral required by agricultural lending institutions across the district was somewhat higher than a year earlier.

By the end of the first quarter of 2026, the district’s average interest rates on farm operating and feeder cattle loans had edged down from the prior quarter, while its average interest rate on farm real estate loans had risen slightly.

Looking Ahead

According to an Iowa lender, “cash flow projections for many operations are at or below breakeven for 2026 and many borrowers are using up working capital to fund those cash flow shortfalls.”

“Unsurprisingly, survey respondents forecasted that the overall volume of non-real-estate farm loans would rise in the Seventh District during the April through June period of 2026 relative to the same period of 2025 — 41% of the responding lenders expected a higher volume of such loans, while 8% expected a lower volume,” the AgLetter noted.

“In particular, operating loans, feeder cattle loans and loans guaranteed by the Farm Service Agency were anticipated to have higher volumes relative to a year earlier, while farm machinery, grain storage construction and dairy loans were anticipated to have lower volumes.”

Survey respondents narrowly forecasted a decline in the district’s farm real estate loan volume in the second quarter of 2026 from a year earlier.

In the first quarter of 2026, 56% of survey respondents considered farmland to be overvalued, while just 1% considered it undervalued.

Over 80% of the responding lenders expected farmland values to be unchanged in the second quarter of 2026, 9% of respondents forecasted agricultural land values to decrease and 8% forecasted them to increase.