WASHINGTON — Farmland values in the central United States surged in the first quarter as higher prices for crops and cattle sparked demand for rural properties, the Federal Reserve Bank of Kansas City said today.
Average prices jumped 20 percent for irrigated and non-irrigated cropland in parts of seven states from the year-earlier quarter, with the biggest gains in Nebraska and Kansas, the bank said in a report on its website. Ranchland rose 11 percent. More than two-thirds of rural bankers surveyed said land values will stabilize as growing season begins in the next three months.
"Shrinking crop inventories and intense competition for planted acreage lifted crop prices, while stronger protein demand boosted livestock prices," bank economists Brian Briggeman and Mary Akers said in the report. "With robust farm income, farmland values posted sharp gains akin to the swift rise in 2008."
The bank's region includes all or parts of Kansas, Colorado, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri. The Kansas City, Mo.-based bank's quarterly survey included responses from 256 banks involved in agricultural lending.
Land values rose in tandem with commodity prices that have increased as the global economic recovery boosted demand, while adverse weather reduced grain supplies in exporting countries around the world.
Corn, soybean and wheat futures were all at least 50 percent higher at the end of the first quarter than a year earlier. Hog and cattle futures traded in Chicago jumped at least 25 percent. Farm income may rise 20 percent to a record $94.7 billion this year, the U.S. Department of Agriculture said in February.
Agriculture accounts for 1 percent of the $14.3 trillion U.S. economy, and may be as much as 15 percent when related businesses such as farm supplies, grain handling and food making are included, Briggeman estimates.
Farm-credit conditions remained stable in the first quarter, lenders said.