The steep rise in U.S. farmland prices creates the potential for agricultural credit problems if there is a sharp downturn in the sector, a leading U.S. financial regulator said on Thursday.
Farmland values doubled in the past decade, reaching a national average of $2,140 an acre in 2010. Record-high crop prices and low interest rates make farmland an attractive investment, analysts say.
Federal Reserve officials said recently they were watching to see if the land market is becoming overheated, or if a price bubble is forming.
Chairman Sheila Bair of the Federal Deposit Insurance Corp said at an FDIC forum "while we don't see a credit problem in agriculture at this time, the steep rise in farmland prices we have seen in recent years creates the potential for an agricultural credit problem sometime down the road."
For more, see: U.S. farmland boom may carry long-term risk: FDIC