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Corn Belt, Plains land values surge -- USDA

The financial world's on shaky footing around the nation. But, there's still a sector that seems unfazed by recent economic tumult: Farm land.

Farm real estate saw an almost 7% increase in value over the last year, according to the results of a survey released recently by USDA-NASS. On average, U.S. farm land costs $2,350 per acre. But, there are major regional differences in the average figures.

"Regional changes in the average value of farm real estate ranged from a 15.9% increase in the Corn Belt region to a 2% decline in the Southeast region," according to a USDA report. "In the Northern Plains and Corn Belt regions, the average cropland value increased 17.2% and 16%, respectively, from the previous year."

Some of those gains in corn and soybean country are offset by value losses in the northeast and southeast, where land lost 1.3% and 1.1% in value, respectively. Pasture in the southeast also lost value, 8.4% over 2010 values.

"The Corn Belt and Northern Plains regions had the highest percentage increase, both 6.6% above 2010," USDA reports of pasture values in those regions.

Though the tide has turned in other parts of the country, land values in the Corn Belt continue to trend higher, some say, to "unsustainable" levels," says Farm Business Talk member idalivered.

"In my area of north-central Iowa, I'm starting to hear some people say that $9,000 is a place to stop. I've talked to a couple investors who feel this is getting unsustainable. This attitude slowly takes willing buyers away to other investments," he says. "I was unsuccessfully involved in 2 recent land auctions and sense the same trend there too. My feeling is no big decline, but maybe a 'leveling off.' If interest rates would rise, then all bets are off. If investors could secure 4% to 5%, many would select another vehicle for parking their money. If loan rates went to 7%, it would make the equation more difficult. All these scenarios siphon potential buyers."

But, regional differences in land values and how the market responds to any future changes in macroeconomic shifts -- whether lower or higher -- will also keep values from seeing a national seachange, adds Farm Business Talk member fernwood.

"There is much variation in the way land is selling. It can vary a lot within a community. We hear about the high land prices but there is a lot of land in other area's that has not see the drastic increases that some area's have seen," fernwood says. "When the bubble bursts -- if there is a bubble -- some area's will hurt much more than others."


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