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Federal Reserve Bank of Chicago - May 4, 1962

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LAND VALUES in the Corn Belt are stronger.
Bankers in most Illinois and Iowa areas report increases
in land values since last fall (see back of Letter).
Furthermore, a sizable proportion of country bankers in
Illinois, Indiana and Iowa (about one in five) consider
the current trend in land values to be up.
The rise in values is small. From October 1, 1961,
to April 2, 1962, bankers reported a 3 per cent increase
in Iowa and 2 per cent in Illinois. In the other states
there was little change.
In all states, bankers reported increases in values
from last spring. The Jargest_gains_ were in Illinois . and
Wisconsin, up 5 per cent, while bankers indicated a rise
of 4 per cent in Iowa and 2 per cent in the other states.

•

The turnaround in land values last year and optimistic, expectations in the Corn Belt this spring reflect
higher farm incomes during 1961 and higher Government
support prices on corn, soybeans and other major crops
in the Midwest. Furthermore, the pressure for additional
land to enlarge existing farm units has continued and has
perhaps even been intensified. Farmers who have participated in the Government's feed-- grain program have
retired 20 to 40 per cent, or More, of their corn and grain
sorghum acreage to qualify for payments and support
prices. In many instances this has made "small" farms
even smaller in terms of utilization of available labor
and machinery. This together with higher support prices
has provided added incentive for farmers to acquire
additional land.
SIGN UP IN THE FEED GRAIN PROGRAM was extended through the middle of April. Final figures show
that farmers agreed to. divert 29.6 million acres of corn
and grain sorghum compared with 26.7 million acres last
year-a. gain_of 11. per. cent- Most of the increase came
in corn where diversion rose. from 20.1 million to 23.8
million, acres while grain sorghum went from 6.5 to 6.7
million acres.
With corn planting just getting under way over much
of the Corn Belt, it is too early to determine the final
reduction in total_ corn acres. .If favorable weather _prevails over large areas of the Corn Belt during the entire
planting season, complying farmers may reduce their
planned diversion and farmers outside the program may
expand their corn acreage. Preliminary figures indicate
sign up has been highestin areas, such as Missouri,
which have had poor weather and has induced farmers to
sign up as "crop insurance."

•

TOTAL ACREAGE RETIRED from production in
1962 will be 47.8 million acres if farmers carry through
their reductions under both the feed grain and wheat programs. In addition to the corn .and grain sorghum acreage
retired, wheat producers have signed to divert 15.1
million acres and barley producers have signed to divert
3.1 million acres.

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Number 652
PRICES RECEIVED BY FARMERS in April dropped
nearly 1 per cent from March reflecting declines for
milk, hogs, eggs and chickens. Partially offsetting this
were higher prices for cotton, corn and wheat.
Dairy prices declined 5 per cent during the month
reflecting both seasonal declines and the reduction in
price supports on manufacturing milk. As a result,
prices in April were 2 per cent under a year earlier and
the lowest for April since 1958. Milkfat prices declined
to the lowest level for the month since 1955.
Dairy Prices Decline Following
Reduction in Support Levels
(Average price received by farmers)
1959

April
10 1961

All milk wholesale
$ per cwt.)

3.91

3.96

Milkfat, in cream
(cents per lb.)

59.8

59.2

March
196

April
1962

4.03

4.16

3.90

60.8

60.2

58.3

FEEDER CATTLE INSHIPMENTS in the first quarter were 18 per cent less than in 1961. All states in
the Corn Belt, except Ohio, recorded decreases from
last year. This reduction reflects the relatively high
prices of feeder cattle and the delay in moving fed
cattle out of feedlots during the winter.
Feeder Cattle Shipments Down in Most Corn Belt States
January-March
.
March
1961
1962
1962
1961
(thousand head)
Ohio
Indiana
Illinois
Michigan
Minnesota
Iowa
South Dakota
Nebraska
Total
8 States

6.0
18.1
59.6
4.0
35.0
150.1
25.6
103.9

11.6
16.1
57.4
4.8
27.3
126.0
13.7
76.8

17.6
52.7
189.7
10.8
132.9
461.2
56.6
268.1

25.0
39.3
154.9
13.5
109.2
380.1
46.9
211.8

402.3

333.8

1,189.8

980.7

Research Department

Per cent change in dollar value per acre of "good" farms
TOP:
October 1, 1961 to April 2, 1962
BOTTOM: April 1, 1961 to April 2, 1962
(based on reports of identical banks)

Illinois
Indiana
Iowa
Michigan
Wisconsin

October 1, 1961
to
April 2, 1962
+3
—1
+2
—1
0

April 1, 1961
to
April 2, 1962
+4
+2
+5
+2
+5

+1

+4

SEVENTH DISTRICT

*Figures not reported due to limited number of replies.

Current trend in farm land values based on opinions of
country banks as reported in April 1962
Per cent of banks reporting trend is:
TOP:
Up
CENTER: Stable
BOTTOM: Down

Illinois
Indiana
Iowa
Michigan
Wisconsin

Up
22
20
23
15
8

Stable
74
79
69
76
84

SEVENTH DISTRICT

19

75

xvi
22
Down
78
4•0
'....
1
9
xvtrfl.
..
,
17
9
7)0
83
8
.
6