US Plains farmland up despite drop in farm income

* Farmland up nearly 4 pct in 2nd qtr on good demand

* Farmers and investors seek U.S. land,

CHICAGO, Aug 13 (BestGrowthStock) – The value of farm land in the
U.S. Central Plains rose nearly 4 percent in the second quarter
as demand for farmland stayed strong from farmers and investors
despite lower farm incomes, the Federal Reserve Bank of Kansas
City said Friday.

“Demand for farmland remained solid as buying by both
farmers and non-farm investors was active,” the Fed said in its
quarterly survey of 240 regional bankers.

“Survey respondents commented that very few farms were for
sale, and most bankers expected farmland values to remain at
current levels over the next three months,” it said.

The Fed’s tenth district, which stretches across Colorado,
Kansas, Nebraska, Oklahoma, Wyoming and parts of New Mexico and
Missouri, is a leading producer of cattle and wheat, corn and
other top row crops. Land values, the main collateral for farm
loans, are widely watched in the district as an economic gauge
of the health of U.S. farm economy. (Graphics:
http://link.reuters.com/dyf94n http://link.reuters.com/syf94n
)

This is the third straight quarter farmland values rose in
the Fed’s tenth district, following a dip in the third quarter
of 2009 as the recession added stress to the struggling
livestock sector.

The Fed said the biggest jump for the quarter was in
cropland as nonirrigated and irrigated acreage rose 4.8 and
5.6, respectively. Ranchland values were up just 1 percent.

Kansas and Nebraska reported the largest gain in crop land,
up 7.9 percent and 6.5 percent.

“Sustained profits in the livestock sector and improved
pasture conditions pushed ranchland values just over year-ago
levels,” the Fed said.

District bankers reported a drop in farm income as crop
prices fell. Winter wheat demand eased and outlooks for huge
corn and soybean harvest weighed on commodity price. But their
outlook for the livestock sector was positive as cattle and hog
prices rose while feed costs fell.

“However, stronger crop prices at the beginning of the
third quarter could boost crop incomes and limit livestock
profits going forward,” the Fed said.

Farm credit conditions held steady despite lower farm
incomes. Non-real estate loan demand eased but is expected to
rise in the next three months as harvest approaches. Bankers
also reported ample funds for qualified borrowers.

“After substantial tightening in 2008, collateral
requirements have stabilized over the last year at an elevated
level. Farm interest rates eased further, averaging 6.8 percent
for operating loans and 6.6 percent for real estate loans,” the
Fed said.
(Reporting by Christine Stebbins; Editing by David Gregorio)

US Plains farmland up despite drop in farm income