In the last 20 years, many investors have enjoyed the robust returns from the long-term investment made in highly productive farmland across the Corn Belt.

However, this year feels particularly different with land values on the upward spiral and commodity prices flashing up and down as fast as a stoplight.

This harvest season it seems obvious to ask: Is it the right time to buy more land or lease additional acreage for the 2009 growing season?

Seems like a simple question, but according to two well-known leaders in farm real estate, Rex Schrader of Schrader Real Estate and Lee Vermeer of Farmers National Company, it's a business decision based on the nature of the individual investor at the table.

“The bottom line for most farmers is what can they get for the crop,” says Schrader. “With profit margins increased dramatically, farmers are willing to pay more for land and rent, which encourages investors to pay more for land.”

For instance, Schrader says if you have tenants who pay $300/acre, based on historical returns of 4-5%, investors would be willing to pay close to $7,000/acre.

“Basically, if you can afford to buy, you might as well, since rents are so high in many areas, but it's really an individual judgment,” Schrader says.

SO WHEN APPROACHING a buying decision, Schrader says it's parallel and it's personal.

“There has to be a balance,” he says. “Very large farmers often own very little land. They are the experts in production and manage to get the highest yields so they're going to put their money into operating and leasing land.”

The downside to that, he says, is “there is a lot of competition out there for cash renting land. There are a lot of tenants capable of farming more so the bidding gets more competitive.”

And with $500/acre cash rent topping the bids in a few areas in Illinois and Iowa, Schrader points to a renewed interest from large-scale producers in purchasing land.

“Large-scale producers are actually buying more land as opposed to leasing because they've accumulated the money to buy,” Schrader says.

Vermeer, who takes a more national perspective, says, “Historically, land has always been a good investment and it still is, but you have to remember it's a long-term investment.”

Over the last few years the cash appreciation of farmland has been a much better return on investment than the stock market, Vermeer notes. “The volatility of the stock market has been even more extreme than the grain market recently. Land is a stable investment,” he says.

One thing Schrader has noticed in the last couple years is the increase in land buys from investor groups, hedge funds and large pools of money.

“There has definitely been renewed interest from investor groups in the last two years,” he adds. “Investors are primarily interested in the increase in commodity prices. They are very in tune with what's going on, and they want to participate in the increased profits by purchasing land, which is directly affected by commodity prices”.

Additionally, Vermeer says that the percent of land being purchased by farmers has also increased in the last two years.

A lot of it comes down to an individual situation, they agree separately.

“It depends on the amount of capital you have. You can tie up a lot of capital buying land,” says Vermeer.

“I know the mindset of farmers: We like to own land,” he adds. “So if the right opportunity comes along, most would like to add additional land, and in my mind it's a great time to do just that.”