Prices paid for farm ground have surged over the past several months. Good farmland in my home area in northwest Iowa, for example, just sold for $9,500/acre. That follows a $10,000/acre price paid in February for a field, nearly a record high price for farmland in Plymouth County. Last November, we thought the $13,950/acre price paid in neighboring Sioux County was an aberration. But farmland prices continue to stay very high.

Recent newsletters from farm management firms and realtors reconfirm the continued high prices for good farmland. The Iowa Farm & Land Chapter #2 Realtors Land Institute surveyed farm realtors about what they estimated farmland values were during March. The survey showed high quality cropland across the state jumped nearly 20% from September 2010 to March 2011. Here’s a look at the average price per acre of different quality land in the March survey:

High quality - $7,380

Medium quality - $5,700

Low quality - $4,034

Non-tillable pasture - $2,213

Cropland prices in Illinois have seen similar surges. Price of the most productive ground in northern Illinoi s increased 14% last year and the price of ground rated good increased 18%, according tothe Illinois Society of Professional Farm Managers and Rural Appraisers. The group also noted that in central Illinois, the top ground increased in value 10% while good ground jumped 22% in value. The group noted that high commodity prices and a lack of good farmland for sale have kept these prices high.

And finally, land values jumped 12% during 2010 for cropland in the Seventh Federal Reserve District, according to the Federal Reserve Bank of Chicago. This is the second largest increase in land values reported in the past 30 years for the district, which includes Iowa and parts of Wisconsin, Illinois, Indiana and Michigan.

The reserve issues an annual summary of growth in agricultural land. The value of Iowa land increased the most at 18%. Indiana was second with a 12% increase in land value, and Illinois was third with 11%.

The survey of the seventh district also noted land values particularly surged in the fourth quarter and expected the surge to continue well into 2011. Iowa, for example, increased land values 8% in the fourth quarter 2010.

While the high land values bring back thoughts of the last land spike in the ’70s and the bust in the ’80s, it may be different this time. Some realtors note that many current farm sales involve a high percentage of cash and that lenders have caps on how much may be loaned/acre. So should land values drop during a correction period, the financial damage may be limited and not similar to the devastation seen in the 1980s.