Farmland Values Hold Firm Despite Weaker Farm Finances, Fed Surveys Show
- Brooke Bouma Kohlsdorf
- 15 hours ago
- 3 min read
Several recent regional reports reflect the continued strength of farmland. But they also show some sectors that face mounting financial pressures, while others show increased opportunities.
American Farmland Owner prioritizes the importance of reporting in-depth research on factors that impact farmland values for current owners, investors, and people who are considering entering this agricultural space.
Steady Farmland Values in the Midwest and Plains
Farmland values across much of the Midwest and Plains remained steady to higher in 2025, even as farm financial conditions continued to weaken, according to recent reports from the Federal Reserve Banks of Chicago and Kansas City.
Both regional Fed surveys suggest land markets have remained resilient despite declining farm income and tighter credit conditions.
Plains States See Stability
The Federal Reserve Bank of Kansas City reported last week that farmland values across the Midwest and Plains states were generally unchanged or slightly higher in 2025.
This is a breakdown of the bank’s Agricultural Credit Conditions findings:
Non-irrigation land values declined by .3% year over year.
Irrigated land values rose 1.2% in the past year.
Ranchland values rose 4.1% during that same time.
The Kansas City Fed district covers a large swath of agricultural territory, including Nebraska, Kansas, Oklahoma, Colorado, Wyoming, western Missouri, and northern New Mexico.
Midwest Farmland Values Rebound
Meanwhile, The Federal Reserve Bank of Chicago, in its AgLetter, reported farmland values in its Seventh District increased 6% in 2025 after a modest decline in 2024.
The Chicago Fed’s district includes Illinois, Indiana, Iowa, Wisconsin, and Michigan. Economists compile the report using surveys of agricultural bankers.
Values for “good” farmland rose 2% in the fourth quarter of 2025 compared with the previous quarter.
At the state level, farmland values increased:
Illinois: 3%
Indiana: 9%
Iowa: 7%
Wisconsin: 9%
Farmland Values in Other Parts of the Country
Land values remained resilient in other parts of the country as well.
The report noted non-irrigated cropland values were unchanged from a year earlier in the St. Louis district as well. The St. Louis district includes Arkansas along with sections of Missouri, Illinois, Indiana, Kentucky, Mississippi, and Tennessee.
Values rose in the Dallas region. That area includes Texas along with parts of New Mexico and Louisiana.
If you take a closer look, regional variation was evident. Cropland values increased more than 5% in northern Indiana, Kansas, and Texas, while values declined about 4% in South Dakota.
Credit Conditions
Despite rising land values, the Chicago Fed reported weakening agricultural credit conditions during the fourth quarter of 2025. The share of farm loans with major or severe repayment problems rose to 5.6%, the highest level since mid-2020.
Bankers also reported increased demand for loans and lower repayment rates compared with a year earlier. About 37% of banks said they tightened credit standards for farm loans, while nearly one-third reported declining repayment rates.
Interest Rates Ease Slightly
Both reports also pointed to slightly improving borrowing conditions.
Interest rates on farm loans have declined from their 2023 peaks but remain above long-term averages. Across Federal Reserve districts, average rates on agricultural loans fell to about 7.5% in late 2025, roughly 1 percentage point higher than the 10-year average.
Loan rates were lowest in the Chicago Fed region at about 6%, while the Dallas Fed district reported the highest rates at just under 8%.
Government Aid Helps Stabilize Sector
The Kansas City Fed report noted that resilient land values and the distribution of ad hoc federal taxpayer assistance helped limit financial stress in the farm sector through the end of 2025.
Even so, farm finances continued to deteriorate gradually during the fourth quarter, reflecting lower farm income and continued pressure on agricultural balance sheets.
What is the Outlook for Farmland Values?
Looking ahead to early 2026, bankers in the Chicago Fed survey expect mixed conditions.
More respondents anticipate farmland values declining in the first quarter of 2026 than increasing. Bankers also expect capital spending by farmers — including land purchases, buildings, machinery and equipment — to decline.
However, demand for non-real-estate loans, including operating loans and feeder cattle financing, is expected to increase compared with a year earlier.
Taken together, the surveys suggest farmland values remain one of the most stable parts of the farm economy, even as producers face tightening margins and lenders take a more cautious approach to credit.
