U.S. farmland prices surged to record highs in the Plains and accelerated in the Corn Belt in the third quarter, powered by bumper grain crops and recovering livestock prices, according to two Federal Reserve bank surveys issued on Tuesday.
Farmland prices are a bright spot for the U.S. economy, with grain farmers retiring debt and building equity that has buttressed farm banks and lenders like the Farm Credit System. The gains have been built on a booming biofuels industry and the U.S. position as the world's top food and grain exporter.
In the Plains states, cropland values rose more than 25 percent over the past year to a record high while ranchland values increased 14 percent, the Federal Reserve Bank of Kansas City said in its quarterly survey of 243 banks in the region.
Meanwhile, the price of farmland in the Midwest Corn Belt rose 25 percent in the third quarter, the fastest year-on-year pace in more than three decades, a survey by the Chicago Federal Reserve Bank showed.
``Record gains in the northern Plains were fueled by another bumper crop this harvest season that raised farm income expectations despite the recent slide in crop prices,'' it said. ''Furthermore, a quarter of survey respondents felt that cropland values had yet to peak.''
The story was the same in the Midwest, which includes Illinois, Iowa, Indiana, Michigan and Wisconsin. Prices were expected to continue to rise this quarter, according to the survey of 216 bankers conducted in October.
Prices of ``good'' farmland alone in the Chicago Fed region rose 7 percent from the prior quarter, the survey showed. That increase matches the one-quarter record set in 1977, it said.
The Chicago Fed district includes three of the top five production states for corn and soybeans, while the Kansas City bank's district includes Kansas, Nebraska and Oklahoma which are top wheat and cattle producers.
Both regions are prime producers of corn for ethanol production, along with sorghum, hogs and other farm products.
The Kansas City Fed said the gains in cropland values in the quarter were the highest in survey history, eclipsing the highs seen in 2008.
But the gains were uneven. The value of nonirrigated farmland in Nebraska, for example, was up 38.3 percent compared to a year ago, while gains were 20.2 percent in Kansas and 10.6 percent in drought-hit Oklahoma.