Monday, May 16, 2016

Farm bubble is deflating

The bubble in farmland prices and rental rates is deflating across the mid-western United States.

The Federal Reserve Bank of Chicago and the United States Bureau of Economics report that land rental rates have decline 10 per cent this year, the steepest decline in 30 years.

They also declined last year.

Farmland prices have declined by about four to five per cent and bankers anticipate further declines.

Farm machinery dealers say sales of new combines and tractors are now rare; almost all sales are used equipment.

The Kansas City Federal Reserve says farmers are taking out more and bigger operating loans and they’re paying off less on existing loans, including mortgages.

Repayment rates have declined for 10 straight quarters.