Farmers and investors in the Midwest are bidding up farmland at auctions as commodity prices surge, Bloomberg reported.

Cropland values in the region were up more in the fourth quarter of 2010 than they have been in at least two years, according to the Federal Reserve Bank of Kansas City. That’s notable for the Midwest, where job losses in the manufacturing sector have put downward pressure on home values and commercial property prices.

Last month, 120 acres of farmland in Greene County, Iowa, drew a winning bid of nearly $1 million. The plot sold for $8,200 an acre, which is 44 percent higher than the $5,701 per acre estimate for average values in Greene County as of Nov. 1, 2010, according to Iowa State University data.

“It’s reflective of what we’re seeing,” said Iowa State economist Mike Duffy. “There’s just not a lot of ground offered for sale.” Duffy said farmland values in Iowa may increase by 10 percent this year if commodities prices remain near current levels. According to an Iowa State survey, values climbed 16 percent in 2010.

“In the next year to two years, I don’t see a lot right now to indicate that it’s going to take a nose dive,” Duffy said. “What people have to remember is farmland is primarily bought by farmers, and they buy it for the long term.”

Bloomberg reported that commercial real estate prices in the Midwest increased by 1.9 percent in the fourth quarter, lagging behind gains in the East, South and West, according to an index compiled by the National Council of Real Estate Investment Fiduciaries.