Even though farm income saw a marginal increase between the second quarters of 2012 and 2013, there continued to be a rapid rise in the value of farmland, according to a new report from the Federal Reserve Bank of St. Louis, which surveyed agricultural banks in parts of seven Midwestern states, including Illinois. Kevin Kliesen is an economist with the Fed in Saint Louis. He says there're anecdotal reports that some of the money is coming from big institutional investors:
"It's difficult to say whether this money is here to stay or whether it's chasing yields, or returns. I guess we'll know once interest rates start to go up and farm income starts to slow or decline."
Even though he's heard plenty of concerns, Kliesen says it remains too soon to know if there is a looming farmland bubble. He says some investors might be looking at farmland as a long-term investment, with the potential to feed a growing world population.
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