U.S. Plains farmland values soared in the fourth quarter of 2010, buoyed by strong farm income and robust demand for farmland, the Federal Reserve Bank of Kansas City said.
The value of irrigated and non-irrigated cropland rose 14.8 per cent and 12.9 per cent, respectively, versus the same period a year earlier. Ranchland values climbed up 9.2 per cent.
“District farmland values surged at the end of the year, posting their strongest year-over- year gains since the substantial run-up in values during 2007-08,” the KC Fed said in its quarterly survey of 253 bankers across the region.
The Federal Reserve’s 10th district – stretching across Colorado, Kansas, Nebraska, Oklahoma, Wyoming and parts of New Mexico and Missouri – is a top producer of wheat, corn and beef cattle in the world’s biggest food exporting nation.
“Cropland values posted double- digit gains from year-ago levels, and ranchland values recorded their sharpest increase in two years,” the Fed said.
The biggest jumps were in Kansas and Nebraska, both big cattle and wheat producers.
Cash rental rates for land rose more modestly – up about six per cent for cropland and four per cent for ranchland. So, with farmland values outpacing cash rents, some bankers were concerned that land values may not keep up their torrid pace.
Demand for farmland was strong from both farmers and non-farm investors, with a slight uptick in the number of farms for sale, according to the Fed survey.
While farmers remained the primary buyers, there were more non-farmers buying land for investment compared with a year ago.