Recently I presented a webcast on the topic of “The Pulse of the Ag Lending Industry” with Web Equity Solutions in Omaha, NE. This webcast had nearly 500 attendees and was very interactive. Prior to the webcast, participants were surveyed concerning the status of local land values and their percep0074ion of the ag economy in their area.
Twenty-one percent of participants still feel land values are increasing, with most people in the “slight” category and less than 4% in the “significant” classification. Thirty-five percent of attendees indicated land values are in a neutral state. Forty-four percent cited a declining mode, again with only 4% in the “significant” classification. The results of this survey concur with data released by the USDA last Tuesday showing the first decline in farm real estate values since 1987.
Tighter lending standards, along with financial stress in the protein and livestock sectors and less investor monies coming into agricultural land purchases – particularly recreational and development – are the culprits behind these trends. The big question is whether this is for the short or long run.
Participants were also asked their opinion of the direction of the ag economy in the next 12 months. Twenty-three percent forecasted “slight improvement,” 15% “no change” and 62% “worsen.” Those who indicated that the ag economy would worsen significantly were probably from the dairy, hog, poultry, beef or horticulture sectors. As a warning, the grain industry needs to get ready – your turn could be just around the corner!
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at firstname.lastname@example.org.