Gilliland notes it's too soon to tell whether this leveling off of land prices and lower sales volume reflect a return to more sustainable price increases, or the start of a retrenchment.

Ranchland appreciation rates also continue to ease across the Plains and Mountain states. Pasture prices in Kansas, Missouri, Nebraska, Oklahoma, Colorado, Northern New Mexico and Wyoming rose an average 11.8% for the 12 months through June, according to the Federal Reserve. That's down from 16.4% for the comparable period a year ago.

Absent a sharp economic downturn, most market participants look for ranch prices to continue to increase at a more modest pace.

Mike Fritz, owner of Mercator Research LLC, in Monona, WI, is editor and publisher of Farmland Investor Letter^®, a monthly subscription newsletter providing farmland market insight and intelligence for farmland investors and managers. He can be reached at m_fritz@charter.net or visit www.farmlandinvestorletter.com.

Harvesting the wind

Wind-farm development is a driver in the foreign purchasing of U.S. agricultural land.

After remaining relatively unchanged from 1996 through 2006, foreign individuals and entities increased their holdings of U.S. agricultural land by 34%, or 5.3 million acres, for the 12 months through February 2007, according to government data. Most of the increase is due to million-acre-plus purchases of timberland by Canadian and Netherlands companies.

Foreign holdings in U.S. pastureland fell 102,533 acres or 2.3% over the one-year period. Foreign buyers were most active in the Northern Plains and Lake States regions, where they boosted pasture holdings 15.2% and 1.3%, respectively.

Meanwhile, foreign holdings in Kansas pastureland jumped 5,582 acres, or 33%, fueled by wind farm developments. Increasingly financed by big European utilities, wind-farm developers are mounting a land grab, rushing to pull together parcels of land in areas with good wind.

The Smoky Hills Wind Project, which involves more than 110 Kansas landowners and 26,000 acres across Lincoln and Ellsworth counties, is being developed by Lenexa, KS-based TradeWind Energy, LLC, which is partially owned by Enel, S.p.A., Italy's biggest power utility. Other European utilities investing in U.S. wind power developments include Germany's E.On, Energias de Portugal of Portugal, and Spanish utility Iberdrola SA.

TradeWind is developing wind farms in 12 states, including two 30,000-acre projects in Atchison, Adair and Sullivan Counties in Missouri; a 15,000-acre project in Elk County, KS; and two wind farms in DeWitt County, IL. Wind-tower leases typically include a 30- to 40-year term.

Foreigners were the most active sellers of pastureland in the Corn Belt and Northeast, where they trimmed their holdings 28% and 25%, respectively. Much of this decline is tied to pastureland owned by Pittsburgh-based CONSOL Energy Inc., which owns some 430,000 surface acres of land in the U.S. and Canada. CONSOL — controlled by German energy company RWE Group in the 1990s — went public in 1998. RWE's equity interest in CONSOL is now less than 10%, which is below the foreign-ownership reporting threshold.

Under the Agricultural Foreign Investment Disclosure Act, foreign investors who acquire, transfer or hold a 10% or greater interest in U.S. agricultural land are required to report all purchases and transfers within 90 days to the USDA Secretary. The regulations also require foreigners to report leases of 10 years or longer.

See Associated Table 1

See Associated Table 2

Related Article:

Pastureland Cool-Down