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Farm Income Flat but Farmland Prices Higher in Q2

The Minneapolis Federal Reserve Bank recently issued its report on farm income in the second quarter of 2023. Joe Mahon, director of regional outreach with the Minneapolis Fed, says while farm incomes were flat, land values were up in Q2.

Mahon says, “We know this. We just got our numbers from the USDA, our annual numbers, and those jive with what we heard in our second-quarter survey. We saw an increase in land values across the region. I believe that we had non-irrigated land values increasing on average by about nine percent across our region. That varied by state a little bit, but that generally held throughout the region, and we saw some increase in irrigated land and pastureland values as well.”

The cost to rent farmland also has gone up. Mahon says, “Rents also up but not quite by as much. We saw the non-irrigated land rents go up by four percent relative to a year ago, and those are generally consistent with what we saw in that USDA report that came out earlier in August.”

The Fed survey showed that capital spending is down on district farms. He says, “Spending on equipment and buildings, that’s down as well. That’s not too surprising, given what we know has happened with interest rates and given what we know about the availability of a lot of inputs like machinery still being pretty hard. Price is still pretty elevated.”

However, farm household spending is still solid. Mahon says, “Spending my farm households is still coming in strong, another indicator that the cash position is okay. So, even though we’re seeing incomes level off, capital investment or spending on equipment and buildings not perking up, the consumer spending by farm households is still coming in pretty strong.”

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