Prices for some U.S. farmland have surged more than 25 percent over the past year in spite of the strong decline in farm income, according to recent reports from the Federal Reserve.

Strong demand for irrigated cropland has pushed prices higher in Kansas, Nebraska, Missouri and Oklahoma. In fact, it’s the ninth consecutive quarter that this region’s land value has jumped more than 20 percent year-over-year. Gains were weaker for non-irrigated cropland (18 percent) and ranchland (14 percent), the latter due to persistent drought leaving the pastures in poor conditions, particularly in Oklahoma and several mountain states. 

In addition, quality farmland in the Midwest and parts of the Mid-South (from Indiana, Illinois and Kentucky to Arkansas, Missouri, Mississippi and Tennessee) was selling for an average of $5,672 per acre, a 20.6 percent increase over last year.

These Federal Reserve reports are based on surveys of bankers who reportedly pointed to the overall wealth of the farm sector, the currently low interest rate and a lack of alternative investment options to explain the surge. Most of those surveyed also believe that farmland values are at or nearing a peak. Indeed, few bankers expect a continued rise in prices; rather, most bankers expect farmland values to remain at current levels.