Farmland in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, and parts of New Mexico jumped 20 percent in the third quarter of 2008, according to a report released by the Federal Reserve Bank of Kansas City this week. Here are some of the reasons why.
The robust demand for ethanol continued to bolster the price of corn as did worldwide demand for commodities. Keep in mind that it was this combination of lean supplies and strong demand that created farmland booms in the 1970s and the mid-1990s. Another essential element of the 1970s boom was the weak U.S. dollar, a factor that created substantial demand for exports then and now.
And don’t forget what happened in the 1980s. Farmland values plummeted 5.2 percent annually, thanks to a global recession, a stronger U.S. dollar, and federal policy decisions. Sound familiar?