FDIC Says US Farmland Values Should Be Monitored

Sheila Bair, chairman of the Federal Deposit Insurance Corp. (FDIC) recently said that "it was important to monitor U.S. farmland values for signs of instability like the price bubble in the housing and stock markets that burst with disastrous consequences for many investors" according to Reuters.

Farmland values are on the rise and "remain 58 percent above their 2000 levels in inflation-adjusted terms."  Investors have been buying farmland because these values have remained strong, while "commercial and residential real estate prices have fallen sharply."

Bair said that the positive farmland values could change and pointed to the farm credit crisis of the 1980s, saying that a "sharp decline in farmland prices similar to the early 1980s could have a severe impact on the nation's 1,579 farm banks."

To read the Reuters story, click here.

Posted: 10/20/2010