Despite widespread drought that slammed Corn Belt yields in 2012, farmland prices continue their upward trajectory, though increases in recent months appear to have backed off from the 20-percent-plus annual gains of recent years.

Midyear farmland price data from the Chicago and Kansas City Federal Reserve banks, as well as surveys by Illinois and Iowa farm manager and Realtor groups, show farmland price increases of 5 to 10% in the first half of the year, substantially below the pace of recent years.

“The increases have slowed, which in my mind is good,” says Lee Vermeer, vice president for real estate operations for Farmers National, the largest seller of farm real estate in the U.S. “You cannot sustain annual 20 to 30% increases. That is too much, too fast. Prices are staying strong, up 5% to 10% this year.”

“The amount of farmland for sale is up. Maybe that is why the increase is lower than what we have seen in recent years,” adds Don McCabe, of Soy Capital Ag Services, Kankakee, Ill., who chairs the Illinois Society of Professional Farm Managers land value survey project.