As commodity prices have reached levels farmers could once only dream of, farmland prices have also soared as investors look for ways to get a better return on their money and to hedge against inflation (which the Federal Reserve continues to insist is negligible).

Consider recent media and financial institution reports:

• 80 acres of rich farmland in Iowa sold last month for $10,000 an acre. Just two years ago, similar land fetched $6,000 an acre. Another Iowa farm, 118 acres, recently brought $11,000 an acre. — New York Times.

• An acre of farmland in Fresno County, Calif., has risen about 20 percent over the past year, from $11,000 to nearly $13,000. — Fresno Bee.

• Midwest farmland prices rose 12 percent in the fourth quarter of 2010, according to the Chicago Federal Reserve Bank. The Kansas City Federal Reserve Bank reported cropland prices up nearly 20 percent over previous year levels.

In a recent Federal Deposit Insurance Corporation forum, “Don’t Bet the Farm — Assessing the Boom in U.S. Farmland Prices,” FDIC Chairman Sheila Bair noted, “Farmland values have doubled on average in the past 10 years and continue to rise in an environment of ample liquidity and low interest rates.

“While we see strong fundamentals in the farm sector at present, the sector remains vulnerable to a reversal of market conditions or a rise in interest rates,” she said. “The lending and borrowing decisions made now, when collateral values are high, will shape credit performance down the road.”

Earlier, Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said in a Senate Agriculture Committee hearing that he had “a nagging concern” that the big runup in farmland prices could be an unsustainable bubble that could burst and damage the nation’s economy.

“It is nearly impossible to determine how much of the farmland boom may be an unsustainable bubble driven by financial markets, and how much results from fundamental changes in supply and demand conditions,” he said.

While land prices in the Mid-South haven’t attained the stratospheric levels of those in Iowa and California, they have nonetheless seen good appreciation, says George Baird, owner/operator of Baird & Brunson Land Management Group LLC, Collierville, Tenn.

“In the past 12 months, farmland prices in our region have continued to climb,” he says, “with increases being reported between 6 percent to 15 percent. Even higher values have been reported in some areas where the market was slow to catch on over the last few years.  

“In many parts of the Delta, we are seeing quality irrigated land selling from $3,200 to $3,800 per crop acre, with reports of land sales regularly topping $4,000 per acre and pushing toward $5,000 in some instances.  

“I would suspect that as commodity prices continue to hold and demand remains strong, these trends will continue, but moderate somewhat.”

Baird, who grew up on a cotton farm in Sunflower County, Miss., says while there is a great deal of interest from outside investors in the Delta farmland market, most of the purchases are being made by local farmers and local landowners.