There does appear to be a localised bubble in farmland values in the corn belt. Near-zero interest rates have undoubtedly played some role in this, but the bigger factor has been the surge in corn and wheat prices over the past decade. We do not believe that a bursting of this bubble would have any systemic risks for the wider financial system. Nevertheless, a slump in farmland prices in the corn belt could hit some small community banks very hard and it would be devastating for the farmers involved.
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