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Federal Reserve Bank of Chicago
April 29, 1966
FARMLAND VALUES in the Seventh Federal Reserve District rose more sharply during the first three
months of this year than in any similar period in recent
years. The average value of "good" farmland has increased about 4 percent since January .and has advanced
more than 10 percent in the 12-month period ended
April 1. This compares with increases of 2 and 6 percent, respectively, in similar periods a year earlier.
According to a recent survey of country bankers, the
current rates of increase are almost twice as great as
those of last year. Land values increased generally
throughout the District-only one area failed to report
gains from both January and a year ago (see back of
Letter).
Farmers have continued to be the largest buyers of
farmland, according to the survey. Seventy-six percent
of the farms sold in the District during the past 12
months (down slightly from 79 percent last year) were
purchased by owner operators who added to their present
farms or by tenants who sought to become owners. Nonfarm investors purchased about 24 percent of the farms,
compared with 21 percent last year.
Farmers Continue to Purchase Bulk of Farms Sold

period a year earlier. This rise probably is indirectly
due to the expansion of business activity in this already
highly industrialized state. Consequently, more farms
have been purchased for investment, subdivision, recreation and residential purposes.
Demand for farmland apparently has strengthened
further in the past few months. The current trend in land
values is viewed as "upward" by a larger proportion of
bankers now than a year earlier or at the beginning of
1966. About 83 percent of the bankers in the recent survey report the probable trend in land values as upward,
compared with only 60 percent a year ago and 74 percent
in January 1966. The continued upward trend in land
values appears strongest in the Corn Belt.

percent

0

20

40

60

80

100

Illinois

lndi.ono

Iowa

Seventh
District

The slight decline in the proportion of farms purchased by farmers in the District occurred primarily in
Michigan. About 40 percent of the farms which changed
hands during the year ended April 1 were purchased by
nonfarmers, compared to 34 percent during the similar

The sharp increase in land values during the last
quarter and the 12 months ended April 1 were apparently
reinforced by the expectation of higher farm income in
the current year. Cash receipts from farm marketings
during the first quarter are estimated at $9.3 billion, up
$1.4 billion from the same period a year earlier. Increased receipts from the sale of livestock and livestock
products accounted for more than three-fourths of the increase. District Corn Belt states recorded increases in
cash receipts considerably above the national average.
These states commonly receive a larger than average
proportion of their total cash receipts from the marketing
of livestock and livestock products.
Net farm income in 1966, according to recent projections by the U. S. Department of Agriculture is likely
to be about $15 billion, the highest since the post World
War II years of 1947 and 1948. Cash receipts from farm
marketings may rise about $2 billion over the $38.9 billion in 1965. Receipts from marketings of meat animals
is expected to show sizable gains over last year since
the volume will be up slightly,and prices are expected to
average above 1965 levels-although lower livestock
prices are in prospect in the last half of this year. A
gain in receipts from marketings of dairy products is also
likely since prices paid by milk plants and dealers will
be well abpve the 1965 levels; this more than offsets a
smaller volume of milk marketings.
Production expenses, however, are also expected to rise more than in
the previous year, leaving a residual of about a billion
dollar increase in net farm income.
David W. Maaske
Economist

Percent chon9e In dollar value per acre of "good" forms
TOP:
January 1, 1966 to April 1, 1966
BOTTOM:
April 1, 1965 to April 1, 1966
(based on reports of identieoi banks)

+ 3
+12

January l, 1966
to
April l, 1966

April 1, 1965
to
April 1, 1966

+4

+12
+12
+10
+8
+ 9
+10

llllnoh . . • . . . • .
Indiana . • . . . . . .
Iowa .. . • . . . . . •
Michigan • . . . • . •
Wisconsin . . . • . .
SEVENTH DISTRICT

+s
+4
+3
+5
+4

Current trend In furm land values bas"d on opinions
of country banks as reported In April, 1966
Percent of banks reporting trend is:
TOP:
CENTER:
BOTTOM:

Up
Stable
Down

~
llllnols . . • . . . . . .
Indiana . . . . . . . . .
Iowa . . . . . . . • . . .
Michigan . . . . . . . .
Wis cons in . . . . . . .
SEVENTH DISTRICT

90
86
87

70
68
83

17

*Insufficient number of banks reporting.