Farmland values in the Corn Belt declined for the first time in 28 years, according to a report Thursday by the Federal Reserve Bank of Chicago.
In states including Illinois, Indiana, Iowa, Michigan and Wisconsin, farmland values fell 3 percent in 2014, due in large part to the drop in soybean and corn prices, according to David Oppedahl, a senior economist who wrote the report. The report reviews a quarterly survey of 224 agricultural banks across the region.
The report showed record levels of soybean and corn production are to blame for the drop in values. Last year, corn and soybean production increased 10 percent and 17 percent respectively.
In 2014, corn producers delivered 14.2 billion bushels of corn, sending corn prices down nearly 14 percent from the year before. Soybean production, at 3.97 billion bushels, was also up, sending prices down an average of 21 percent from a year earlier, Oppedahl wrote.
Just three years ago, farmland prices soared, climbing 16 percent as demand remained strong despite the worst drought in 50 years.
Farmland values are tracked by government economists as a gauge of the economy and health of the banking system.