Anew government report shows that the value of Virginia's farm real estate grew 3.5 percent last year despite the sluggish economy.

The estimate by the National Agricultural Statistics Service puts the average value of Virginia farm real estate, which includes land and buildings, at $5,900 per acre.

Nationwide, farm real estate averaged a record $2,350 per acre Jan. 1, up $190 per acre, or 8.8 percent, from a year earlier.

Gordon Groover, a farm management specialist with the Virginia Cooperative Extension, said farm values can vary significantly from one part of the state to the next.

"Most of the value of [farmland] in Virginia is driven by something other than agriculture," Groover said. "A lot of amenities that go with land ownership are not related to agriculture."

Considering recent high prices for commodities such as corn and soybeans, Virginia farmland could be worth $3,000 to $4,000 an acre just for its agricultural value, Groover said. Historically, however, the agricultural value of Virginia farm acreage has been $500 to $1,000, he said.

In such parts of the state as the Shenandoah and New River valleys, the Chesapeake Bay region and the upper Piedmont, such development pressures and amenities as scenic vistas help push up land's price beyond what would be justified by its agricultural use, Groover said.

While farm real estate is at a record high nationally, so too are the values of unimproved cropland and pastureland. Cropland was up 10 percent to $2,970 per acre and pastureland up 6 percent to $1,230 per acre.

The federal agency attributed the record values to strong commodity prices, farm programs, outside investment, favorable interest rates and tax incentives. Livestock prices, urban development and recreational use drove pastureland values, agency said.

Virginia's farm real estate value is the highest in a region, which also encompasses Kentucky, North Carolina, Tennessee and West Virginia. In second place was North Carolina with a 2008 value of $4,800 per acre.

However, the yearly percentage increase in Virginia's real estate value was the lowest in the region. West Virginia was the leader with an 8 percent increase in value, from $2,500 to $2,700 per acre.

The implications of the high land prices for farmers depends on who owns the land, Groover said. It can be to a farmer's advantage to rent rather than own land.

For example, the report says Virginia cropland without improvements is worth an estimated $6,300 per acre this year, up 5 percent, while the annual cash rent for cropland is $45 per acre. Virginia pastureland is worth $5,700 per acre, up 3.6 percent, but has a cash rent value of $22 per acre.

Long-term relationships are required between people who own land and those who farm or timber it, Groover said. Tools such as land-use taxation and conservation easements help and encourage such relationships, Groover said.

Owning land is a good safety net in your investment portfolio, Groover said. "Regardless of what happens in a financial crisis, land nearly always increases in value."

Contact Greg Edwards at (804) 649-6390 or gedwards@timesdispatch.com.