It follows that after this year's harvest of cornucopia-sized yields in major crops across North Dakota and Minnesota gets calculated against the high levels of crop prices, the news is that the ground under it all is rising in value.
The Federal Reserve Bank of Minneapolis released numbers Friday to the Herald showing that farmland prices in the five states in the district were up 9 percent in the third quarter just ended, compared with the third quarter in 2009.
Irrigated farmland prices were up 6.8 percent and ranch land was up 3 percent in the same period, said Toby Madden, regional economist with the Minneapolis Fed.
Minnesota was the best performer, with non-irrigated farmland up 12.3 percent in the third quarter over a year earlier.
Prices for North Dakota's dry land farm acres were up 10 percent in the quarter over 2009's third quarter; irrigated acres were up 3.6 percent in price and ranch land up 4.7 percent, Madden said.
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His numbers are based on a survey of about 130 bankers in North Dakota, Minnesota, South Dakota, Montana, northwest Wisconsin and upper Michigan, the Ninth District in the Federal Reserve's system.
The Federal Reserve districts in Chicago and Kansas City released similar farmland price numbers in recent days.
Madden said he will release the numbers generally next month with a larger report on farm credit conditions.
The land price figures come from bankers' estimations, not from crunching data from actual land sales, Madden said. But they remain a key benchmark.
And they reflect, perhaps only dimly, what's happening on the ground as farmers have lots of money and are looking for places to park it.
John Botsford, a leading and longtime broker of Red River Valley farmland, said he's got about as much as he can handle with hot land sales, usually done at public bid openings.
He formed a new company 18 months ago, Red River Land Co., in Grand Forks, but he's been dealing farmland for 30 years.
"We have had overflow crowds at every bid opening," he said Friday. "We been allowing in the top 10 bidders but turning people away."
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A sale recently of 80 acres of top Valley sugar beet land eight miles north of East Grand Forks brought a winning bid of $3,300 per acre, he said. That's 10 percent to 15 percent higher than he figures it would have sold for a year ago.
At a recent opening of bids on 320 acres near Fordville, N.D., of sandier soil, he allowed in 15 bidders. The land, not the top producing type found in the bottom of the Valley, went for $1,550 per acre, up 15 percent to 20 percent over last year, Botsford said.
It's all a brisk change from the past 18 months of a slower, recession-weary land market, after the huge price increases two to four years ago when crop prices, production and farm income hit record levels.
"It took off again this fall," Botsford said of the farmland market. "Because once the harvest started coming in and commodity prices started moving up, well, we had the best of both worlds. It's seldom they move in tandem."
Corn is a big kernel of the deal: record per-acre yields in Minnesota and North Dakota along with record or near-record acreage and production, plus prices near abnormal highs of $5 a bushel mean big profits -- $300 to $500 per acre -- for a huge swath of farmers.
Wheat, soybeans, sunflowers, sugar beets and potatoes largely show similar patterns of profitability this year.
The U.S. Department of Agriculture recently estimated net farm income would be up 24 percent this year, to $77.1 billion, which, while below the record of $80 billion-plus in 2004, is still 19 percent above the 10-year average.
Botsford said he's hearing that farm equipment dealers can't keep up with demand and some farmers can't get guarantees of delivery on new combines before the 2011 harvest.
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The Chicago Fed reported this week similar upsweeps in farmland prices: 10 percent higher in the Corn Belt states of Iowa, Illinois, Indiana, as well as Michigan and the rest of Wisconsin. Iowa farmland showed the biggest jump at 13 percent.
A week ago, the Kansas City Fed reported prices for irrigated farmland there were up 9.6 percent for the same period in Nebraska, Kansas, western Missouri, Oklahoma, Wyoming, northern New Mexico and Colorado.
It's a big switch from a year ago, when non-irrigated farmland in the Minneapolis Federal Reserve district fell 6.1 percent in the third quarter over the previous year, Madden said; irrigated land was up 4.5 percent and ranchland was down 6.7 percent, districtwide.
A year ago, North Dakota's nonirrigated farmland was down 3 percent in the third quarter from the previous year, while irrigated farmland was up 9 percent and ranchland was down 1.2 percent, Madden said.
In the third quarter of 2009, Minnesota's dry land acres were down 11.8 percent from the same period in 2008; irrigated land was down 4.9 percent and ranchland was down 10.7 percent.
Reach Lee at (701) 780-1237; (800) 477-6572, ext. 237; or send e-mail to slee@gfherald.com .
