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The value of American farm real estate declined for the first time in more than two decades, delivering another dose of bad news to some rural economies already struggling with falling commodity prices and job losses.

The U.S. Department of Agriculture reported values of farm real estate — which includes the value of all land and buildings on farms — had dropped 3.2 percent over the past year, with plunges in some states as high as 22 percent. The declines were released this week in an annual survey conducted by the agency.

"It’s a big deal. The last time values went down was in the 1987 survey," said Ron Plain, professor of agricultural economics at the University of Missouri-Columbia. "It doesn’t happen very often. It reflects problems out there on the farm."

In Missouri, values dropped 4.3 percent, to about $2,200 an acre. In Illinois, the decline was a scant 0.4 percent, to $4,530.

Agricultural economists, including Plain, were quick to point out, though, that the dip follows years of record gains. The decline, while noteworthy, does not necessarily mean land values will tumble as they did in the farm crisis of the 1980s, said Pat Westhoff, a director at the Food and Agricultural Policy Research Institute, based at the University of Missouri.

"We have seen many years in a row of rapid increases," Westhoff said. Still, he noted, "when you see a decline you start to worry."

In the early to mid-’80s, values fell nearly 30 percent nationally over five years, bottoming out in 1987 at about $600 an acre. At the time, high interest rates, government lending practices and decreased demand for commodities, among other factors, forced farmers into foreclosure or into taking distress-sale prices for their land.

"We lived through that in the 1980s, but it’s different now," said Roger Allison, a grain and livestock farmer in north-central Missouri and director of the Missouri Rural Crisis Center.

Indeed, some analysts believe farmers will be more resilient in today’s troubled economy because debt ratios are much lower and because some, particularly grain farmers, have seen near-record profits in recent years.

"We’re coming off a couple of good years," said Gary Schnitkey, a professor of farm management at the University of Illinois at Urbana-Champaign. "Their financial situations are pretty strong."

The areas that saw the greatest declines over the past year were in cattle ranching, hog farming, dairy and ethanol-oriented grain growing areas where demand for those products has slowed, according to the USDA survey. The mountain states where cattle ranching predominates declined nearly 11 percent. Cornbelt states, covering Illinois and Missouri, dipped 2.2 percent. Plains states, including Kansas, saw no change over the last year no teletrack payday loan.

"In some areas land values are off more than others, and I think it’s primarily areas more impacted by ethanol plants or livestock," said Jerry Warner, president of the Denver-based American Society of Farm Managers and Rural Appraisers. "… Where cash grain farming is the predominant economy, values are very stable."

It’s too soon to say whether the declines are having — or will have — any real impact on farmers, mostly because few farmers are selling their land.

"People seem to be more guarded about buying and selling real estate so there just hasn’t been enough activity to test the marketplace," said Daryl Oldvader, CEO of FCS Financial, a Jefferson City-based financial services company specializing in rural and farm areas.

Oldvader said he hadn’t seen any lending difficulty yet and wasn’t aware of farmers here having trouble getting credit because of the depreciation in land values. "This is relatively fresh," he said. "Whether it will find itself becoming more complex, we don’t know yet."

But much depends on commodity prices and the recession in general, Warner said. "If we have stable commodity prices, I don’t think land values will go down at all."

In some farming areas, though, the picture is already darkening. Less demand for meat and ethanol has meant some areas are already shedding jobs.

A study released this spring by the University of Missouri’s Rural Policy Research Institute revealed that rural areas, which had been shielded from the recession during last year’s spell of high commodity prices, had begun to lose jobs faster than urban areas, particularly in manufacturing. As of February, the study showed, rural job losses in Missouri hit a rate of 4 percent, while the national average for metro areas was 2.8.

"You really have to go back to the ‘73 or ‘74 recession to find a time when rural manufacturing had this type of downturn," said Mark Drabenstott, the report’s author. "This is important in a state like Missouri, where you have a lot of small- and medium-size farmers getting a significant portion of their income from working in a factory."

If job losses continue and commodity prices slide, land values could decline with a deepening recession.

"If the recession drags on, we’ll be down next year," Plain said, referring to land values. "It’s a warning sign of trouble ahead, more than of problems right now."

But, he warned, "If this continues, farms are going to go broke."

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