Farmland value soars

OMAHA, Neb. – The average value of farmland in several Midwestern and Western states grew 25 percent over the past year in the biggest one-year jump in at least three decades.

The increase reported Tuesday by the Federal Reserve Bank of Kansas City, Mo., reflects current low interest rates and a healthy farm economy. But the higher land values will make farming more expensive.

Land values increased despite widespread flooding and drought that many farmers in the region struggled with this year. Several hundred thousand acres of farmland along the Missouri River spent much of the summer under water because of flooding, and southern Plains states have been battling severe drought.

But as long as the weather in their area cooperated, farmers did well. Corn prices hit a record high of $7.99 a bushel in June because thin supplies prompted fears of a shortage. Wheat prices also have been high, and some farmers have used the extra income to buy land.

The increase in land values is the biggest since the bank began issuing its quarterly report in 1980. The third-quarter report is based on a survey of 243 banks in Kansas, Nebraska, Oklahoma, Wyoming, Colorado, northern New Mexico and western Missouri.