By Leslie Reed
Omaha World-Herald 

LINCOLN -- After several years of double-digit growth, agricultural land values might be on the decline.

While prices for cropland remain high, some properties are fetching 10 to 20 percent less than they would have a few months ago, agricultural real estate agents said.

Researchers at the University of Nebraska-Lincoln and Iowa State University say they don't yet have data to show a decline, but anecdotal evidence suggests the red-hot markets of recent years may be cooling.

"It hasn't necessarily turned (downward) so much as it's plateaued,'' said Bruce Johnson, a UNL agricultural economics professor who conducts an annual survey of Nebraska land values. "The last six to eight weeks have really taken a toll on commodity prices, and that's taken some of the bloom off land values and introduced a lot more caution.''

Potential buyers are uncertain about agriculture's profit picture, with grain prices dropping by one-third to one-half since the financial meltdown began on Wall Street. Seed and fertilizer expenses also are significantly higher.

"We're in a bit of a state of hesitation and unsureness at the moment,'' said Jerry Wiebusch, a Lincoln real estate agent who works for a national ag real estate company. "We're still having a great run. Sales have been strong.''

State Sen. Kent Rogert of Tekamah, who sells agricultural real estate, seed and other ag services, said land prices in northeast Nebraska -- which had experienced a "land boom'' -- have dropped as much as 20 percent in three months.

"Land prices went pretty crazy over the summer, and some of those guys who bought that land now may be thinking it was not such a great idea,'' Rogert said. "They're coming down to a value where they should have been or a little less.''

Wiebusch, who sells farmland in Nebraska, Iowa and South Dakota, said prices remain high and ag land remains a solid investment -- but the market is showing "a little bit of indecisiveness.''

"The seller still wants the price he could have gotten six months ago, but the buyer wants to give him a little bit less,'' he said. "Are we doing a stutter-step here? When we've gone from $6 to $3 (per bushel) corn, the answer is yes.''

He said top quality farmland still collects top-dollar prices. A farm in northwest Iowa sold for $9,000 an acre earlier this week, while some Nebraska farmland still is being listed at $6,000 per acre.

Chris Langemeier of Schuyler, another state senator who sells agricultural real estate, said he has not seen a downturn. At a land auction Friday in Leigh, a 40-acre parcel of dryland farm ground sold for about $2,800 an acre, he said.

"There were interested bidders; it went for a really good price,'' he said. "For the quality and type of ground, that's a good sale.''

The average value of Nebraska agricultural lands increased a whopping 72 percent from Feb. 1, 2004, to Feb. 1, 2008, Johnson said.

Land prices climbed along with commodity prices, fueled by a building boom for ethanol plants that has since cooled.

Mike Duffy, an ISU economics professor who monitors agricultural land prices, said farmland is selling for 5 percent to 6 percent less than it did three to six months ago - but it is still fetching higher prices than a year ago.

As recently as August, a banking industry survey showed ag land had increased 15 percent in the past year. In September, a real estate industry showed a 17 percent annual increase.

But both of those surveys were done before the economic crisis hit and grain prices dropped.

Ag land values are closely tied to grain prices, with farmers bidding up rents and land prices based upon projected profits. Because farmland is infrequently sold -- usually only after the death or retirement of its previous owner -- its value is calculated based upon rent rates and income potential along with sales prices.

Researchers and real estate agents said the next several months will reveal more about future land values. The peak period for land transfers in the ag sector is between fall harvest and spring planting.

Johnson and Duffy said they expected some farmers and landowners to renegotiate farmland rental agreements because profits are expected to be lower next year.

Johnson will survey land values in February, with his results to be released in March. Duffy will release results next month of a survey of land values as of Nov. 1. He said Friday that he was reluctant to guess what the survey will show.

"There was such a run-up in land values that started two years ago when we saw the ethanol boom really kick in,'' he said. "Everything's just been kind of crazy since then. And then came September, when the whole bottom of the economy started falling out. Where we go from here is always up in the air. It's even more so now.''