Midwest Farmland Values Increase, 'Good’ Farmland Sees Largest Gains

Demand for farmland dropped, the amount of farmland declined, and the number of farms and amount of acreage sold also went down according to a new report assessing developments in the Seventh Federal Reserve District. But agriculture land values inched up and values for “good” farmland increased the most. The trends are part of the Federal Reserve Bank of Chicago’s AgLetter. 

AgLetter compiles data from Iowa, Wisconsin, Illinois, Indiana, and Michigan. The five-state region saw a 1% increase in farmland values in 1st quarter 2025 vs. 1st quarter 2024. The report found “good” farmland has experienced the largest gains during the 1st quarter of this year. Values have increased 4% so far this year.

Increase in Top Quality Farmland Varied by State

No state in the five-state region had a larger increase in values for “good” farmland than Wisconsin over the past year. The Badger State’s landowners enjoyed an 11% rise in value for “good” farmland from April 1st, 2024 to April 1st, 2025. Wisconsin was the only one of the five states to see a rise in that category over the past year.

Wisconsin and Iowa both had 4% increases over the first quarter of this year, which outpaced Indiana’s 1% gain. However, Illinois saw a 5% gain. (The report did not get enough responses from Michigan to provide meaningful data.)

RELATED: This Midwest state offers an agricultural tax break even if there is not an apparent farm operation.

Credit Conditions Dropped During the First Quarter

Repayment rates for non-real estate farm loans declined over the first quarter, while demand for loans went up. That demonstrated the weakened conditions for the district over the first three months of the year.

Demand for loans hit its highest level in nine years. And repayment rates fell for the sixth straight quarter to the lowest level in five years. Farm loan renewals and extensions also climbed to their highest point in five years. Nearly one in five borrowers carried more debt heading into 2025 than they had the year before.

Report Shows Mix of Farmland Value Increases and Heightened Credit Demand

AgLetter author and policy advisor David Oppedahl summed up the mix of data in the new report. He said, “Farmland values were a bit higher than they were a year ago, with some upward movement in these values from the previous quarter. But at the same time, farm credit conditions continue to deteriorate somewhat.”

Oppedahl explained the tightening of credit conditions as the result of different financial pressures. “It’s just the general squeeze that’s happened from the input costs rising and staying relatively high, plus crop prices remaining lower than in the 2021–23 period.”

Although, he pointed out that different agricultural industries are experiencing different environments. “It seems like the livestock subsector is doing better than the crop subsector this year. There’s a little bit of a decrease in feed costs when you have crop prices coming down, and then livestock prices have generally stayed strong.”

Oppedahl expects continued demand for access to farm credit, not for major purchases but to cash flow operations. “We continue to see higher demand for operating loans. And that’s likely to continue into the next quarter. There’s less demand for farm mortgages and for loans related to farm equipment and the building of structures. So, we’re in a period where you’re seeing relatively higher volumes of certain kinds of loans that help meet immediate liquidity needs.”

RELATED: American Farmland Owner found that crop share leases have declined in a key agricultural state.