The surge in farmland prices, which doubled in a decade amid an agricultural boom, should cool in the coming year as prices bump against the ability of cropland to pay for itself.
A combination of low interest rates and high commodity prices sent levels skyrocketing. Nebraska cropland values soared by 38% during 2010, while Iowa was up 28% and Indiana up 27%, say Federal Reserve regional banks.
A 160-acre farm near York in eastern Nebraska sold for $12,000/acre in February, a record for land in the state.
Soaring prices have prompted fears of a price bubble that could ruin farmers' finances in an economic downturn. So far, farmers and lenders have been cautious and land prices are justified by likely returns.
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