Midwest Farm Values Soar on High Crop Prices, Low Debt

A report from the Federal Reserve Bank of Chicago said farm land in the midwest of the United States has jumped the highest for a one-year period in 36 years, soaring 25 percent during that time.

Confirming the numbers, the Kansas City Fed also reported a 25 percent gain in farmland prices in the region year-over-year.

Most of this has been the result of price jumps in many areas of farming, including dairy, livestock and various crops.

The report from the Federal Reserve Bank of Chicago asserted that "... 2011 may go down in the annals of U.S. agriculture as a once-in-a-generation phenomenon."

Another key factor in rising farm prices is the interest by investors in farm land, as the realization there isn't going to be any more land to farm even as the world population increases.

In the short term the soaring farm prices have generated concern over the possibility of a bubble, but because of lower debt loads by farmers than they held in the 1980s, as well as what appears to be sustainable prices of crops, has a number of analysts believing a bubble in farm land is an unlikely scenario.

Farmland prices have also slowed down in growth, rising in value by 4 percent over the last quarter of 2011. Expectations are farmland prices will continue to climbe in the first quarter of 2012.