Kansas City Federal Reserve District: 1st Quarter Farmland Values Down

As farmland owners thinking about selling, and potential buyers eye appealing land during the first month of 2025’s second quarter, they know that values have dropped so far this year, according to the Kansas City Federal Reserve District’s report. 

The report covers the country’s Tenth District, which includes Kansas, Missouri, Nebraska, Oklahoma, and the Mountain States (Colorado, northern New Mexico, and Wyoming, which the report states are grouped together because of limited survey responses from those areas).

Responses came from 117 lenders in the District, according to the report’s authors.

Oklahoma’s Farmland Values Increased Most in Region from 2024

Nebraska saw the biggest farmland value decline compared to the previous year. The state’s nonirrigated farmland dropped five percent, while irrigated land and ranchland fell six percent.

Oklahoma experienced a much different year-to-year change. Nonirrigated farmland climbed five percent, and irrigated land inched up one percent. Ranchland increased the most: eight percent from 2024. 

“Together with a weaker farm economy, elevated farm loan interest rates also contributed to cooler agricultural real estate markets,” the report’s authors wrote. “Interest rates on farm loans have dropped slightly over the past year alongside lower benchmark rates but remained about 100 basis points above the average of the past 20 years. The average rate charged on all types of agricultural loans was about 20 basis points less than the previous quarter and about 60 basis points less than the same time a year ago,” they added.

RELATED: Farmland values were “settling,” according to Famers National Company last summer. These were the trends to watch. 

Overall, the farmland values in the Tenth District went down two percent for nonirrigated land and four percent for irrigated land. Ranchland edged up one percent.

Perspective: “Despite some easing, average farmland values remained more than 50% higher than in 2020 and 165% higher than in 2010. Over those same time periods, cash rents increased only 30% and 60% from 2020 and 2010, respectively,” the report found.

The Tenth District report revealed that farm financial conditions continued to weaken. If there is a positive to that, it is that the decline in both farm income and borrow liquidity stayed at approximately the same level as in the past few quarters.

Nearly 60% of the lenders reported a yearly drop in farm income. However, the situation was better in Oklahoma and Mountain States, areas that benefitted from improved cattle revenues.

Loan repayment rates slowed in the first quarter, extensions increased, and some financial lenders tightened their credit standards, according to survey respondents.

More debt carried over from 2024 to 2025, the report found. “On average, about 20% of farm borrowers in the District had an increase in debt not covered by operating revenues from the past year. The rate of carryover was about 8 percentage points higher than the previous year and was similar across most states,” the authors wrote.

RELATED: There were some reasons that Wisconsin’s farmland values were climbing at a slower rate last fall. This American Farmland Owner story looked into those.