Chicago Fed Report: Midwest Farmland Values Rising

Agricultural land values in the Midwest increased in 2025, reversing a modest decline the previous year, according to the latest from the Federal Reserve Bank of Chicago’s AgLetter.

The quarterly publication, written by economists with the Chicago Fed, analyzes agricultural land values and credit conditions across the bank’s Seventh District, which includes Illinois, Indiana, Iowa, Wisconsin, and Michigan.

The findings are based on responses from agricultural bankers who completed the survey as of Jan. 1, 2026.

Land Values Rebound

According to findings, agricultural land values in the Seventh District increased 6% in 2025, following a modest decrease in 2024. Values for “good” farmland rose 2% in the fourth quarter of 2025 compared with the third quarter.

RELATED: A Midwest land broker tells us why he describes land values as having “selective strength” in 2025 and what he thinks will happen in the coming year. 

Illinois (+3%), Indiana (+9%), and Iowa (+7%) each recorded single-digit annual increases in values for 2025 for “good” farmland. Wisconsin also posted an annual increase (+9%), substantially larger than its gain the previous year.

Deteriorating Credit Conditions

While land values improved, the AgLetter reported continued weakening in agricultural credit conditions during the fourth quarter of 2025.

The share of the District’s farm loan portfolio classified as having “major” or “severe” repayment problems increased to 5.6% in the fourth quarter — the highest level since the second quarter of 2020.

Repayment rates for non-real estate agricultural loans were lower in October through December 2025 compared with a year earlier, while renewals and extensions of those loans were higher. 

Here are some other highlights: 

• 47% observed higher loan demand than a year earlier, while 12% observed lower demand.

• 20% reported having fewer funds available to lend compared with a year ago, with 3% who reported more.

• 32% noted lower repayment rates relative to a year earlier, and 1% reported higher rates.

• 37% of banks tightened credit standards for farm loans compared with a year earlier.  Standards essentially stayed the same for 69%. 

• 77% of banks did not raise collateral requirements for non-real-estate farm loans, while 23% required larger amounts of collateral.

• 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.

  
  

Outlook for 2026

Survey respondents projected mixed conditions for early 2026. More bankers expected farmland values to decline in the first quarter of 2026 (20%) than to increase (7%).

RELATED: Jim Knuth, senior vice president of lending in Iowa for Farm Credit Services of America, shares his cautious but optimistic outlook on agriculture in 2026. 

Respondents also anticipated that capital expenditures by farmers would decline again in the year ahead across several categories, including land purchases and improvements, buildings and facilities, machinery and equipment, and trucks and autos.

Farm real estate loan volumes were forecast to be slightly lower in the first quarter of 2026 compared with the same period in 2025. In contrast, non-real-estate loan volumes — including operating loans, feeder cattle loans, and loans guaranteed by the U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) -- were expected to increase relative to a year earlier.