U.S. farmland prices--already at record highs--may rise even further, fueled by low interest rates, increasing price of agricultural products, Purdue University economist says

Andrew Rogers

LOS ANGELES , February 27, 2012 (Industry Intelligence) – Professor Brent Gloy, an economist at Purdue University, said the price of U.S. farmland—already at a record high—may rise even further, fuelled by low interest rates and the increasing price of agricultural products, Bloomberg reported Feb. 24.

He added that much of the increase in the price of farmland had been fuelled by farmers who were looking to expand their acreage.

Farmers’ expansion plans will eventually be constrained by either a decrease in agricultural prices or higher interest rates, Glory said.

The United States Department of Agriculture said that, in 2011, the average price of farmland hit a record $2,350 per acre.

The Federal Reserve Bank of Chicago said that the price of farmland in the Midwest measured by the agency increased 22% in 2011, which constitutes the largest annual increase since 1976.

According to reports released by the Federal Reserve Bank of Kansas during February 2012, ranchland in the Kansas City Fed’s region grew 14% and cropland rose 25% in 2011.

Based on a survey of real-estate transactions by Iowa State University, the average price of farmland in Iowa increased 32% to a record $6,708 per acre in 2011.

The primary source of this article is Bloomberg, New York, New York, on Feb. 24, 2012.

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