ETHANOL IS FEEDING HOT MARKET FOR FARMLAND
August 8, 2007
Skyrocketing farmland prices, particularly in states like Illinois, Iowa and Nebraska, giddy with the promise of corn-based ethanol, are stirring new optimism among established farmers. But for younger farmers, already rare in this graying profession, and for small farmers with dreams of expanding and grabbing a piece of the ethanol craze, the news is oddly grim. The higher prices feel out of reach, says the New York Times.
- In central Illinois, prime farmland is selling for about $5,000 an acre on average, up from just over $3,000 an acre five years ago, a study showed.
- In Nebraska, meanwhile, land values rose 17 percent in the first quarter of this year over the same time last year, the swiftest such gain in more than a quarter century, said Jason R. Henderson, an economist at the Federal Reserve Bank in Kansas City.
- A federal-government analysis of farm real estate values released Friday showed record average-per-acre values across the country; the analysis said property prices averaged $2,160 an acre at the start of 2007, up 14 percent from a year earlier.
In Iowa, which produces more corn and is home to more ethanol plants than any other state, farm rental prices are mimicking purchase prices: they were up about 10 percent this spring over a year ago, according to a study by William Edwards, a professor at Iowa State University who said it was the largest jump since he started tracking farm rents in 1994.
And ethanol is leaving marks everywhere. New grain bins seem to be popping up all around the Midwest, farmers from Indiana to South Dakota say, and some of the highest farmland prices have been seen around the nearly 200 existing or proposed ethanol plants, where the cost of transporting the corn would be the cheapest.
Source: Monica Davey, "Ethanol Is Feeding Hot Market for Farmland," New York Times, August 8, 2007.
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