After buying 42 acres of Nicollet County farmland, Bryce Peterson is looking toward the sky even more this year.

His effort to expand the family farm comes amid record-high land prices, making an inherently risky business even more so.

“All the land (prices) are going crazy in this area and surrounding areas. It’s nuts,” he said.

Of course, he can also look forward to near-historic prices for his corn, but even that doesn’t guarantee a good year.

“It’s a gamble either way. The price of corn goes up, but the price of everything else is up, too,” he said.

Across the country and closer to home, land prices continue to rise along with the price of corn and soybeans, a new agriculture department study shows. Many farmers are riding the trend, but with a note of caution — this can’t last forever.

Corn boom

Record-high corn and soybean prices are the first place any discussion about land prices should start.

“If you’ve got a good 80 (acres) out there, it’s going to bring at least 5,000 dollars an acre and that’s an all-time high,” said Wayne Schoper, Extension educator for Brown and Nicollet counties.

Sure, crop prices have taken a big hit during the past four to six weeks, he said, but even the 35 percent drop has left prices “in the top couple of percent,” historically.

Ethanol and other biofuels are typically credited (or blamed, depending on your perspective) for high prices.

The same trend that is favoring strong corn prices — the cost of oil, boosting corn-based ethanol — is also raising costs for oil-based farm chemicals such as fertilizer.

“That could be another sign that the values could stall,” Schoper said of still-high oil prices.

The U.S. Department of Agriculture report shows Minnesota cropland prices rose by 12.8 percent, to $2,820 an acre in 2008. But for the prime land of south-central Minnesota, prices are rising even faster.

In Nicollet County, there have been eight farm sales since October that can be used to set land values. That means the sales weren’t between family members and didn’t have other circumstances that spoiled them for comparison purposes.