Pacific Northwest, Southcentral ag land values holding up -

Those two regions also seem to be bucking the trend of declining values seen in other parts of the country.

Editor / Progressive Dairy

Dallas Federal Reserve Bank District

---

Limited offerings meet strong demand

Limited offerings are being met with strong demand, helping hold Northwest agricultural real estate values steady through the first half of 2016, according to the latest Northwest Farm Credit Services (FCS) Land Values Market Snapshot.

Northwest FCS appraisers track market data throughout Idaho, Montana, Oregon and Washington. The averages encompass all land types, including irrigated crop, dry crop, pasture and range land and permanent plantings.

The number of sales transactions are well below the average during the past decade, reflecting supply constraints, not weak demand. As a result, average land vaues of parcels larger than 40 acres are flat in Montana and Oregon, but higher in Idaho and Washington.

Within the region, demand and market activity are generally dependent on property type or market segment. Many transactions are occurring between landlords and tenants. Additionally, many areas report increased investor interest in agricultural properties.

Land values are holding despite concerns surrounding declining commodity prices and unfavorable weather patterns in select areas. Both irrigated and dry cropland values continue to remain strong.

The market for dairy facilities remains slow, with smaller units typically purchased for their land base and facilities abandoned or converted to heifer capacity. Larger units are generally purchased by out-of-state buyers or as expansion units for existing operations. Dairy operations continue to compete for land base to expand feed production and nutrient management.

Continued activity on larger acreage ranch units is evident in the Northwest. These properties have primarily been purchased by existing operators. There continues to be an active market for good quality pasture tracts in many areas.

Fruit, nursery, nut and winery properties are generally stable to increasing. Forestland continues to be in high demand with strong pricing.

Market activity in the Northwest recreational market has increased. The rural residential market follows the trends of the single-family residential market, especially near employment centers.

Declining commodity prices and lower net farm incomes, as well as localized drought conditions, remain a concern for land values across the Northwest.

Read the full Northwest FCS report.

Dallas Federal Reserve Bank District

Land values hold despite mounting pressures

Lower commodity prices, higher production costs and weather continue to raise economic concerns within the Federal Reserve Bank of Dallas district, according to a quarterly agricultural bankers survey. The district covers all or portions of Texas, New Mexico and Louisiana.

Despite those pressures, second-quarter 2016 land values were mostly higher. Compared to the previous quarter, irrigated land values rose 4.7 percent, while dryland values were up 2.3 percent. Ranchland values were mostly unchanged. Most survey respondents expect farmland values to decline in the coming months.

Year-over-year, ranchland and dryland values were up, but irrigated cropland values declined slightly.

Second-quarter 2016 district-wide land value changes compared to previous year

Dryland: +4.3 percent
Irrigated cropland: -1.0 percent
Ranchland: +1.5 percent

With the exception of operating loans, borrowing demand decreased for a third consecutive quarter. Loan renewals and extensions picked up as repayment rates slowed. Credit standards tightened somewhat, although a vast majority of bankers reported no change.

Specific to dairy, only about 4 percent of the bankers saw an increase in loan activity during the quarter; about 16 percent reported a decline, and 80 percent saw no change in dairy loan volume.

Lower prices are resulting in financial stress among cattle producers; grazing conditons were rated good across the district.

Fixed-rate and variable-rate loan interest rates were mixed compared to the previous quarter.

District-wide average interest rates compared to previous quarter

Fixed rate