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Chicago Fed says higher 2025 farmland values may help farmers navigate tight credit conditions

A policy advisor with the Federal Reserve Bank of Chicago says an increase in farmland values at the end of 2025 will help farmers mitigate challenging credit conditions this year.

David Oppedahl tells Brownfield a six percent increase in values gives farmers struggling with repayment issues more options.

“The banks have the option to request that the owner sell a bit of that land to be able to help fund their operations, that’s something that we might anticipate a little more of,” he says.

He says higher land values are likely linked to farmers purchasing once-in-a-generation acres and 1031 exchanges, which allow farmers to sell one property and reinvest the proceeds into another similar property to defer taxes.

Oppedahl says deteriorating credit conditions are only impacting a minor segment of customers in their quarterly survey of ag bankers, but spending habits are expected to be conservative.

“Bank respondents were not anticipating that farmers would be buying much in terms of new land purchases, building and facilities, machinery, equipment, and trucks,” he says.

Demand in the fourth quarter for non-real-estate farm loans compared to a year ago was up for the ninth consecutive quarter.

Oppedahl says the expectation for continued interest rate declines could offer the ag sector a bright spot in the year ahead.

The Seventh Federal Reserve District includes all or parts of Illinois, Indiana, Iowa, Michigan, and Wisconsin.