Higher Corn Prices, Higher Farmland Prices

Crop land value is rising faster than apartments in Manhattan.

The price of cropland all over the world is rising more quickly than many urban areas for the first time in 30 years.

High commodity prices, including a rising demand for corn for ethanol production, have caused the value of crop land to climb 16% in Indiana, compared to a 12% appreciation for an apartment in Soho, London.

Murray Wise, chairman and CEO of Champaign, Illinois' Westchester Group Inc., told Bloomberg that farmland returns "will take a quantum leap over the next 18 months,'' after corn prices surged to a 10-year high in February.

According to UBSAgriVest data, U.S. farmland value rose 34 of the last 37 years, and average U.S. farm prices rose 15% in 2006. Wise says prices in the Midwest may gain 12% annually through 2017.

The trend is present overseas as well. In Australia's biggest cattle-grazing state, land rose around 10%. In Argentina, the price of corn farms spiked by 27% in 2006.

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