Prices of arable land, which fell for the first time in a decade in the July-to-September period, recovered at the end of last year, a Federal Reserve report showed.

Irrigated land was 1.4% more expensive in the fourth quarter than a year before, with non-irrigated acres appreciating by 2.3%, the Reserve's Kansas bank said, crediting the increase to "stronger crop prices at the end of the year."

However, ranchland remained below levels of a year ago, by 7.3% in Kansas, the briefing said, noting "anaemic profit opportunities" for livestock farmers, and adding that "herd reductions dampened demand for cattle grazing,"

One Nebraska banker contacted for the report said that cow and calf farmers were "really struggling", adding that "we are losing ranchers every year".

A Kansas banker said: "Livestock income is much lower for 2009, with mounting losses per head."

Cattle in clover

However, the data come a day after the US Department of Agriculture report forecast that livestock farmers would lead a $6.7bn rise in America's net farm income this year, thanks to an 11.7% rise in the value of their production compared with a drop in the value of arable output.

"Now that the US economy has stabilised and is showing signs of improvement, consumers are expected to increase their consumption of animal products, thus firming up market prices and improving the earnings of livestock producers, led by dairy farmers and cattle producers."

Livestock farmers' expenses were set to increase by 3.3%, an increase because of the rising price of animals bought.

Cash deals 

The Federal Reserve report attributed the rise in arable land values in the last quarter of 2009 to rising farm incomes, "due to a harvest rise in crop prices and above-average yields".

Bankers surveyed also noted a rise in cash purchases of land, as might be expected during a period of tight credit, and a slowdown in demand from housebuilders and developers of leisure sites.

The report added that many respondents expected a pick-up in farm capital spending this year, after cutbacks in purchases of agricultural equipment in 2009.