After a disappointing 2008 for farmland values, declining for only the third time in the last 100 years, farmland prices rebounded nicely in the first quarter of 2009. Accoridng to the Federal Reserve Bank of Chicago's May AgLetter, year-over-year farmland values increased 2%, with the biggest increase coming in Wisconsin. However, "good" agricultural land fell 6% during the first quarter in the Chicago Fed's district.

According to the Wall Street Journal, the decrease in farmland values over the last year has hurt farming credit. Due to farmland values decreasing in some spots, many farm lenders have increased their collateral requirements on farm lending. That in turn, has made it even harder for farmers to get new lending.

Does this mean farmland isn’t a good investment now?

What this translates into is one of the best opportunities to invest in farmland. For farmland, the old saying, “buy low, sell high” is difficult to implement as farmland is rarely “low.” We believe that farmland has reached its, “low” in some parts of the Midwest, creating a great buying opportunity.

Won’t values fall even further?

We believe that any decline in farmland values deserves buying attention because of farmland's consistent return history. Values very well could drop even further due to unforeseen events, but due to the difficulty of farmers in South America, ending stocks of grains at record lows, and the supply of global farmland decreasing, we find it hard to believe that farmland values will stay down for too long.

- Colvin