U.S. Farmland Price Boom To Slow, But Not Plateau

Despite high land prices, markets have made the investment pay off for investors.

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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TAGS: Pasture
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