The rebound in crop prices has yet to be reflected in a
reviving US farmland market, with the decline in real estate values
accelerating to its fastest rate since the depths of the world economic crisis.
An index of US farmland values compiled by Creighton
University fell to 40.9 last month, the lowest in five years, and well below the
50.0 level indicating a neutral market.
The decline was reflected across the range of areas, from
Wyoming, a largely livestock-producing state, to Iowa, the top producer of corn
And it defied a rebound since late January in agricultural
commodity prices, whose retreat had been seen as a big driver of the downturn
in the farmland market.
Corn and soybean prices have recovered more than 10% since
the end of January, with Chicago wheat futures up by one-quarter.
'Very weak sales'
The crop price recovery has also yet to feed through into
the farm equipment sector, which showed shrinkage in business for a nine successive
month, retreating to its weakest since May 2009.
"Agriculture equipment and implement dealers in the agriculture
based areas are experiencing very weak sales to farmers," Creighton economics
professor Ernie Goss said, if adding that machinery makers "are experiencing
positive growth due to healthy sales abroad".
Earlier this week, AgJunction, a US-based maker of
satellite-based agricultural equipment, highlighted the contrast between thriving
foreign business and a slower domestic market.
Indeed, the US rural economy as a whole remains stagnant.
"We will need to see additional increases in farm commodity
prices to push the agriculture-based economy back into healthy growth territory
such as was experienced in 2012 and early 2013," Professor Goss said.
'Put the brakes on'
Separately, farm industry leaders in Illinois also
highlighted the impact of lower crop market on farmland values, noting declines
of 2% in the price of top-quality farmland in the state last year, of up to 7%
in worse-quality sites.
"Sharply lower grain prices have diminished earnings
projections and put the brakes on the uptrend in farmland values," said Dale Aupperle,
of the Illinois Society of Professional Farm Managers and Rural Appraisers,
which released the data.
While the market did not appear to be in a "bubble", Mr Aupperle
forecast that "a more normal time for farmland prices may be in store for the
next several years.
"Commodity prices have led to this situation."