OMAHA, Nebraska – Farmland values in areas of the grain belt states served by Farm Credit Services of America (FCSAmerica) softened slightly in the last half of 2018, but remained stable overall. Benchmark farmland values in Iowa, which generally is on the leading edge of changes in the real estate market, declined 1.4 percent in the last six months of 2018. For the year, farmland values were largely unchanged. Nebraska and South Dakota each saw modest declines for the year. Only Wyoming experienced an uptick in benchmark farmland values, although the few number of farm sales in that state make it challenging to analyze its real estate trends.

Tim Koch, chief credit officer for FCSAmerica, says “The softening of the market in the latter half of 2018 wasn’t unexpected and, in fact, it better aligns farmland values to profitability in the grain sector. While producers in many areas of our territory benefited from strong yields in 2018, the industry continues to be challenged by compressed margins. For producers who rent farmland, softening in the market will help their bottom line.”

Compared to the market’s peak, farmland values are down 19.5 percent in Nebraska, 18.1 percent in Iowa and 12.0 percent in South Dakota. Continued pressure on profit margins could lead to additional softening in 2019. However, the same factors that have helped to stabilize the market for the past three years remain in place, including interest rates near historic lows and strong demand for quality land that is in tighter supply.

The chart below reflects changes in farmland values for FCSAmerica’s 64 benchmark farms. The number of benchmark farms in each state is noted in parentheses.

Fourteen of Iowa’s 21 benchmark farms decreased in value in the last six months of 2018, while two increased and five showed no change. In Nebraska, eight farms declined in value, six increased and four showed no change. Twelve benchmark farms in South Dakota showed no change in value, four increased and seven decreased in value. Wyoming’s cropland benchmark farm experienced a 4.2 percent increase in value and its pasture unit improved 2.0 percent.

FCSAmerica appraises its benchmark farms twice a year, in January and July. In addition, the cooperative compiles records from farmland sales in its four states. The cooperative’s objective in using the benchmark farms is to track real estate values without the influence of changes in land quality on sale prices.