(Bloomberg) - Farmland values in the central U.S. probably rose faster in the first quarter than in the last three months of 2010, according to Jason Henderson, a Federal Reserve Bank of Kansas City economist.

Values are surging as higher prices for corn, wheat, soybeans and cattle spark demand for rural properties, Henderson said Monday at the North American Agricultural Journalists annual conference in Washington, D.C.

"Increases look like they're going to be rising faster," said Henderson, who works out of the bank's branch in Omaha, Neb. "You are looking at increases in value of over 20 percent across the Corn Belt."

In the fourth quarter, prices jumped 14.8 percent for irrigated cropland in parts of the seven states in the Kansas City Fed region from a year earlier, the bank said in a February report. The increase was 12.9 percent for non-irrigated land. A majority of rural bankers surveyed said land values would climb in the next few months.

Henderson said higher interest rates could quickly unravel the farm boom, eroding profits for farmers who have taken on additional debt for land investments. He said it's unclear how long land buyers can include high crop prices and low interest rates in investment models.

"The question is, how long that will hold," he said.

The bank's region includes all or parts of Kansas, Colorado, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.

The KC Fed's survey for the fourth quarter included responses from 253 bankers involved in agricultural lending.

Agriculture accounts for 1 percent of the $14.3 trillion U.S. economy and may be as much as 15 percent when including related businesses such as farm supplies, grain handling and food making, the KC Fed estimates.

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