CHICAGO, IL – Midwest farmland values were unchanged from a year earlier during the second quarter, while agricultural credit conditions weakened. Federal Reserve Bank of Chicago lenders reported flat values for good farmland, the slowest year-over-year growth since late 2024.
After adjusting for inflation, farmland values fell 3.7%, the largest real decline since 2016. Illinois and Iowa values increased, while Indiana and Wisconsin declined. Data-center, solar, and wind development helped support some land markets.
Farm repayment problems also increased. Loans with major or severe repayment problems accounted for 3.7% of agricultural portfolios, the highest level since 2020, while renewals and extensions remained elevated.
Average operating loan rates were 7.12%, feeder cattle loans 7.14%, and farm real estate loans 6.79%. Lenders also reported greater collateral requirements and more operating and mortgage lending than normal.
Looking ahead, most bankers expect farmland values to remain stable, but 14% anticipate declines. They also expect stronger demand for operating and feeder cattle credit while machinery, grain storage and real estate lending weaken.
Farm-Level Takeaway: Flat land values and weaker repayment conditions show financial pressure is building even before farmland prices decline sharply.