“With the prices of most farm products dropping as the quarter ended, it’s not much of a surprise that key measures of [Seventh] District agricultural credit conditions deteriorated during the first quarter of 2020,” said David Oppedahl, senior business economist for the Federal Reserve Bank of Chicago in the May 2020 Ag Letter.

“Once again, repayment rates for non-real estate farm loans were lower than a year ago, plus renewals and extensions of these loans were higher. Demand for non-real estate loans in the first quarter of 2020 grew from a year ago. Both the amount of collateral required and the availability of funds to lend were also higher than a year earlier. At 78.9%, the average loan-to-deposit ratio in the first quarter of 2020 was unchanged from the previous quarter. Average interest rates on farm loans fell over the first quarter of 2020 from their levels at the end of the fourth quarter of 2019,” said Oppedahl.

Agricultural land values for the Seventh Federal Reserve District edged up 1% in the first quarter of 2020 from a year ago, despite challenges to the farm sector related to Covid-19, according to the Chicago Fed’s most recent report on agricultur.

Oppedahl reports that overall, there was no change in “good” farmland values from the fourth quarter of 2019 to the first quarter of 2020, according to the survey responses of 113 District agricultural bankers. “The survey responses covered farm sector activity in the entire first quarter of 2020, most of which occurred before the proclamation that Covid-19 represented a national emergency in the U.S.

“Annual cash rental rates for District farmland were down for the seventh consecutive year in 2020. The amount of farmland for sale in the 3-6 month period ending with March 2020 was roughly equal to that in the same period ending with March 2019. Yet, the number of farms sold and the amount of acreage sold were somewhat lower during the winter and early spring of 2020 compared with a year earlier, as demand to purchase agricultural land seemed to ebb a bit.,” he said. “Just over half of the responding bankers expected District farmland values to be stable during the second quarter of 2020, while the rest expected agricultural land values to decrease.”