However, compared with the fourth quarter, the frantic pace of farmland price gains moderated, the Fed said.
Non-irrigated cropland and irrigated cropland rose 7.7 percent and 9.0 percent, respectively, from the fourth quarter of 2011 to the first quarter of 2012. By comparison, non-irrigated cropland and irrigated cropland rose 3.4 percent and 2.9 percent, respectively, between 2012's fourth quarter and the first quarter of this year.
"Cropland value gains slowed compared with last year due to falling crop prices and rising input costs," the bank said.
(U.S. Plains farmland values:)
The western half of Missouri posted the biggest jump in land values, with non-irrigated farmland prices up 28 percent from a year earlier, the Kansas City Fed said.
Bankers in the Kansas City Fed district said record land prices raised debt obligations for young and beginning farmers and producers expanding their operations.
"Producers appeared to be taking advantage of record low interest rates to finance capital purchases but were using cash to cover operating costs, limiting overall operating loan demand," the bank said.
Loan repayment rates remained higher than in 2012, but bankers expected the pace of improvement to slow due to rising production costs and forecasts for lower farm income.
"Some bankers expressed concern that a downturn in farm income or land values could impact the ability of more leveraged operations to meet debt obligations, particularly for borrowers using land as collateral on other loans," the Kansas City bank said.
Also on Wednesday, the Federal Bank of St. Louis issued its first-quarter survey for farmland in the southern Midwest and Mid-South, a region that includes eastern Missouri, Arkansas, southern parts of Illinois and Indiana, western sections of Kentucky and Tennessee, and parts of northern Mississippi.
Bankers said farmland values fell 2 percent in the district from the fourth quarter, but the survey provided no year-earlier comparisons because this was only the bank's fourth quarterly survey.
However, many bankers also thought land values and cash rents would continue to rise in the current quarter, if at a tempered pace, the St. Louis Fed report said.
"In the District as a whole, 51 percent of respondents indicated that the financial condition of crop producers improved either modestly or significantly from one year ago. In addition, another 31 percent of respondents indicated no change in the financial condition of crop producers," the St Louis Fed said. "Only 2 percent of bankers identified a decline in land values as the most significant risk in 2013."
The Chicago Federal Reserve, which surveys bankers across the heart of the Midwest Corn Belt, said it will release its banker survey on Thursday.