Lamoni, Ia. -- Jim Anderson set a Decatur County record after paying $4,000 an acre for a 75-acre farm.

"It's pretty good ground," Anderson said Friday after he outbid about 20 other people, including bidders from California, Illinois and northern Iowa, at the Lamoni Community Center. Decatur County typically has the lowest-priced farmland in Iowa, with an average price last year of $1,828 an acre.

The record-breaking bidding underscored the fact that these are high times down on the farm, where high prices for crops and farmland are sending U.S. agriculture to altitudes never seen before.

In Iowa and the three other states covered by Farm Credit Services of America, a leading agricultural lender, farmland prices have risen 20 percent or more in the past year, said Kirk Manker, chief appraiser of the bank.

Iowa farmland rose 22.6 percent in 2007, Manker said. Nebraska farmland rose 19.6 percent in a year, South Dakota showed a 22.6 percent increase and Wyoming had a 20.9 percent increase.

Farm Credit Services tracks real estate values by making semi-annual appraisals of 68 farms, Manker said. It also has followed 7,500 sales of farmland in the four states.

Manker credited profitable prices and increasing yields of corn, soybeans and wheat, relatively low interest rates, and ethanol production, which is increasing the demand for corn.

Another factor is the low value of the dollar compared with other currencies, which is boosting exports of U.S. agricultural products because it makes U.S. goods relatively cheap.

Investors who don't farm and people buying land for recreational purposes also influenced the farmland market, he said.

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Iowa State University Extension economist Michael Duffy, who conducts an annual survey of Iowa farmland prices, said he thinks Iowa's farmland market will be strong for at least five years.

"We have seen a fundamental shift in demand for corn due to ethanol production," Duffy said. "I don't think this demand will diminish in the near future."

Iowa farmland set a record in 2007 for the fifth year in a row, Duffy's survey showed, rising to an average of $3,908 an acre, 22 percent more than a year ago. It was the largest one-year increase since 1976.

Duffy said farmland prices are an important economic indicator because they reflect the health of the farm economy and represent a significant amount of net worth for landowners.

Other surveys show farmland prices also are on the rise in the eastern Corn Belt.

The Federal Reserve Bank of Chicago's most recent survey of agricultural bankers showed that farmland prices rose 21 percent in Iowa, 17 percent in northern Indiana, and 10 percent in parts of Illinois, Wisconsin and Michigan during the year that ended Oct. 1.

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David Oppedahl, business economist for the Federal Reserve Bank of Chicago, said the bank is now surveying agricultural lenders to determine prices during the quarter that ended Dec. 31. The bank will release those results next month.

"It could be pretty eye-opening," Oppedahl said. "I'm hearing about some land sales that are getting pretty high. Some of these large operations have an increased buying power to purchase land."

Murray Wise of the Westchester Group Inc., a leading Midwestern farm real estate brokerage based in Champaign, Ill., said the Iowa farmland market "is hotter than most, but Illinois, Indiana and Ohio follow close behind."

Wise said that today's higher prices for corn, soybeans and wheat are usually caused by drops in supply. This bull market for crops has been caused by demand from biofuel producers and export customers.

"This is a demand-driven market," Wise said. "It's only the second one in history."

The first demand market occurred in the early 1970s, when the Soviet Union purchased large quantities of U.S. grains, Wise said. That demand market only lasted about a year.

"It's a different world out there," Wise said. "The good times are here for an extended period of time."

One spillover from the housing market downturn, Wise said, is a shift of capital from mortgages to agriculture.

"East Coast lenders are saying they want to go into agriculture," he said. "Capital wants a home in U.S. ag."

Jim Farrell, president of Farmers National Co. in Omaha, the largest U.S. farm management company, said the farmland boom extends to states in the Upper Midwest, the Great Plains and the southeastern United States.

Farmers National operates in 21 states and sold more than 600 farms last year for a total of $270 million, Farrell said.

Landowners who don't farm seem to think now might be a good time to cash in on high farmland prices, he said, so more land is on the market.

Farrell said a higher percentage than usual of farmland purchasers are farmers like Anderson, who represent about 75 percent of buyers.

Anderson, 57, of Danvers, Ill., has been buying farms in southern Iowa since 1979.

He has watched prices climb steadily after hitting bottom in the farm crisis. In 1986, farmland in Decatur County sold for an average of $326 an acre.

Friday's $4,000-an-acre price surprised real estate broker Mark Gannon of Ames, who held the auction.

"That's what you get when you sell into a grain market like this one," Gannon said.