Farmland Is Getting Frothy

Chicago Fed (h/t Calculated Risk):

With a 25 percent increase from a year ago for the third quarter of 2011, District farmland values exhibited their largest rise since 1977. Iowa’s agricultural land values led the District with a year-over-year increase of 31 percent for the third quarter of 2011 (see map and table below).  The District’s farmland values surged 7 percent from the second quarter to the third quarter of 2011, matching the highest previous quarterly gain since 1977.

Revisions were performed recently that affect the changes in District and state agricultural land values back to the fourth quarter of 1993 (for details, contact the author).  Once these revisions have been taken into account, the gains in farmland values were larger than previously reported in the AgLetter. In 2007, the index of inflation-adjusted farmland values for the District passed the previous peak of 1979 (see chart 1). Since District farmland values hit bottom in 1986, the compound annual growth rate for farmland values has been 5 percent (adjusted for inflation). The revised path for District farmland values more closely matches one based on farm real estate values (each year as of January 1) from the U.S. Department of Agriculture (USDA), which uses an acre-weighted average for the five District states.

Once you start talking about the late seventies, there is a problem out there.  From 1979 to 1986 was pretty painful in the Midwest, and I don't want to see it repeated.  I can remember when Iowa came out with their America Needs Farmers stickers on their helmets.