Land Values Hold Firm in Midwest as Farm Borrowing Needs Increase

A new change has impacted one of the long-standing responsibilities of the Federal Reserve Bank of Chicago, which monitors the agricultural economy across the Midwest.

The Chicago Fed's district includes some of the nation's most agriculture-intensive states: Iowa, Wisconsin, Indiana, Illinois, and Michigan.

Each quarter, the bank releases survey results from agricultural lenders through its AgLetter publication. These responses provide a snapshot of land values and credit conditions—two key indicators of the financial health of farms and farm operators throughout the region.

The Chicago Fed released its latest edition. For the first time, the survey incorporates responses from Farm Credit institutions in addition to traditional banks.

Here are some of the key takeaways:

Are land values increasing?

Farmland values across the district were up 3% compared to a year ago. However, the value of "good" farmland slipped 1% from the fourth quarter of 2025 to the first quarter of 2026.

Demand for farmland purchases was lower during the period ending in March 2026 compared to the same period a year earlier. At the same time, the amount of farmland available for sale declined during the winter and early spring months of 2026 compared with 2025.

The number of farms sold and the total acres changing hands were also down in the first quarter of 2026 compared with a year earlier.

Cash Rental Rates

Annual cash rental rates for farmland across the district declined 3% in 2026, marking the second consecutive year of decreases.

 RELATED: Why a new cash rental rates survey out of Iowa shows support for some farmers, but pressure for others. 

State-by-state results varied. Average annual cash rents increased 2% in Indiana but declined 1% in Illinois, 4% in Iowa, and 1% in Wisconsin. There were not enough survey responses from Michigan lenders to calculate a reliable year-over-year change.

Credit Conditions

Agricultural credit conditions continued to weaken during the first quarter of 2026.

Repayment rates on non-real-estate farm loans were lower from January through March compared with the same period in 2025. Meanwhile, renewals and extensions of those loans increased.

Demand for non-real-estate farm loans rose for the tenth consecutive quarter compared with a year earlier. The availability of funds for agricultural lending declined for the twelfth straight quarter.

Average interest rates on farm operating loans and feeder cattle loans edged lower from the previous quarter, while average interest rates on farm real estate loans increased slightly.

Looking Ahead

One Iowa lender participating in the survey offered this assessment of the current farm economy:

"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."

According to the AgLetter, lenders expect overall non-real-estate farm loan volume to increase during the second quarter of 2026 compared with a year earlier.

Higher volumes are anticipated for operating loans, feeder cattle loans, and loans guaranteed by the Farm Service Agency. Meanwhile, lenders expect lower volumes for farm machinery loans, grain storage construction loans, and dairy loans.

 RELATED: What data from the Kansas City Federal Reserve Bank says about conditions in that district. 

Despite ongoing challenges in the farm economy, most lenders do not expect significant movement in farmland prices in the near term. In fact, 80% of survey respondents said they expect farmland values to remain unchanged during the second quarter of 2026.