By Scout Nelson
Agricultural real estate values in the Kansas City Federal Reserve District, including Kansas, declined modestly in the first quarter of 2025. Nonirrigated farmland values fell about 2% compared to a year ago, reflecting weaker farm incomes and tougher economic conditions in the region. While some states saw varied trends, Kansas experienced a slight decrease in land values, similar to neighboring Missouri and Nebraska.
Crop prices remained low, keeping the agricultural economy subdued. Farm loan repayment rates worsened as many producers faced tighter cash flow. Meanwhile, demand for farm loans increased as farmers sought additional financing to cover expenses. Loan renewals and restructuring also rose, indicating growing financial pressure on borrowers. Despite these challenges, loan denials stayed low in most areas.
Interest rates on farm loans remained above their 20-year average, adding to the financial strain on farmers. Though rates have eased slightly over the past year, they are still high enough to affect land markets and financing costs, especially for highly leveraged borrowers.
Kansas producers reliant on crop revenues faced more severe financial stress, while cattle producers experienced better conditions due to strong cattle prices. Lenders noted that livestock income helped offset some losses, but many crop farmers struggled with low prices and rising costs.
About 75% of farm borrowers in the region had manageable debt levels, but around 25% had high debt-to-asset ratios, increasing their risk of financial difficulties. Some lenders also reported a rise in carryover debt and tighter credit standards to protect their portfolios.
Looking ahead, lower crop prices and higher financing costs may continue to pressure Kansas farm real estate values and credit conditions. Emergency assistance programs could provide some relief, but overall farm financial health remains fragile in the near term.
Photo Credit: gettyimage-jamesbrey
Categories: Kansas, Business