Commodity Price Increases Bring Higher Farmland Prices

Thursday, February 23rd, 2012

In the last five years, Lon Frahm has bought 4,000 acres of farmland, expanding the size of his wheat and corn operation to more than 30 square miles of western Kansas. He's done so as farmland prices have roughly tripled in his swath of the Great Plains.

But unlike some regulators and farmland investors, Frahm, 54, says he doesn't believe the United States is in danger of a farmland price bust similar to the one that devastated the housing industry in the past decade - or that crippled agriculture 30 years ago. He says he won't be surprised if farmland prices level off or even fall, but not in a catastrophic spiral like the one that left millions of homeowners owing more than their property is worth.

"The fundamentals are there to support (farmland prices) right now, just like they have been for most of the time in the last 100 years," Frahm says.

The Colby, Kan., farmer may be right. Farm economists, bankers and land auctioneers say far less borrowing is going on now than what produced a massive exodus of bankrupt farmers in the 1970s and '80s. Frahm says the catchphrase when he went into farming then was "borrow yourself rich."

Read More: USA Today