Farmland prices, farm incomes in Midwest continue to fall, Federal Reserve Banks report

Farmland prices in parts of the Midwest continue to tumble. The Federal Reserve Bank of St. Louis reported Thursday that the average price of quality farmland in its district—parts of Illinois, Indiana and Missouri—dropped 2.6 percent from a year earlier, Jesse Newman reports for The Wall Street Journal.

"In the Kansas City Fed’s district, which includes Kansas and Nebraska, irrigated-cropland values declined 1 percent, while the average price of non-irrigated land rose 0.4 percent, the bank said. Irrigated farmland depends on man-made water systems rather than rainfall," Newman writes. "In the Chicago Fed’s district, which includes Illinois and Iowa, prices for farmland remained largely the same in the third quarter compared with a year ago and rose 1 percent versus the second quarter of this year, the bank said."

The reports showed "that farm households were continuing to cut back on both household expenses and capital spending for their operations—and were expected to keep trimming costs in the coming months," P.J. Huffstutter reports for Reuters. "The rural economy has been hit by recent bumper harvests that have pushed grain prices to five-year lows and by a strong dollar that has hurt exports. As a result, farmers have curtailed spending on their businesses, which has sent ripple effects across the agricultural sector and affected everyone from tractor makers to seed companies."

The U.S. Department of Agriculture "projected farm incomes this year would drop by 36 percent from 2014 to $58.3 billion because of declining crop and livestock prices," Huffstutter writes. "The forecast is down 20 percent from the USDA's February estimate of $73.6 billion."