The Kansas City Federal Reserve issued their latest Agricultural Credit Conditions report for the 4th quarter of 2012. Due to the widespread drought in their area, irrigated cropland values saw a 13 percent jump in the 4th quarter alone and up 30% for the year. Cash rental rates for irrigated cropland also surged more than 20% from the prior year.
Although fourth-quarter incomes were better than expected, but there is concern about the drought affecting certain areas in the months ahead. Capital spending rebounded in the 4th quarter although loan demand remained low.
More non-farmers appear to be buying farmland for recreation and residential development than the prior year, although levels are still much lower than previous years, primarily due to farmers snapping up most of the available land.
Crop land surged by more than 25% compared to the previous year in Kansas and Nebraska with Missouri not too far behind.
Paul Neiffer, CPA