During the last couple years, farming has been kind to most producers. Farm profits and investments are soaring. Farmland values are also booming.

The outlook remains rosy. Additional gains are expected given current production costs and crop prices.

Lean supplies, strong export activity and robust demand are driving this train. Crop prices have reached record highs offsetting today's skyrocketing productions costs, both in this country and abroad.

Ethanol production has played a major supporting role in this current boom. Ethanol's voracious appetite for corn helped trim crop inventories.

An ever increasing, robust world economy coupled with the weak dollar has also helped give the agricultural sector a boost.

There is no question the outlook for U.S. farmland values depends on global crop production and crop demand including ethanol production and export activity.

Farmland accounts for nearly 85 percent of the asset base of the farming sector. Because farmland accounts for the bulk of Kansas and U.S. farm assets, changes in farmland values have major financial implications for this country's farming sector. Rising farmland values have boosted farm wealth.

Last year, farmland values posted record gains in many regions of the Corn Belt. Farmland values are up more than 15 percent from a year ago, according to the Federal Reserve.

Irrigated and non-irrigated cropland values jumped 21 percent in the Kansas City Federal Reserve district, which includes Kansas. The largest gain in its 50-year survey history.

And with rising farmland values, farm balance sheets also increase. This all adds up to improved health on this country's farms.

Farm assets are predicted to rise 13.1 percent in 2008, according to the U.S. Department of Agriculture. Asset levels are expected to outpace debt levels, pushing farm debt rations to record lows.

So, how long will this prosperity continue in farm country? How long will current farmland values remain high?

That's a difficult question to answer. However, farmers know better than anyone that commodity prices in agriculture can turn on a dime.

Just look back to the mid-1970s and 1990s when agriculture was booming. Those outstanding years were short lived. They ended abruptly when crop supplies increased and this country's exports decreased. Rising farmland values accompanied by huge financial debt which increased agriculture's vulnerability also contributed to dropping income during the 1980s.

The value of farmland, like other income producing assets, can be projected from the expected flow of future income. Looking at historical data from the U.S. Department of Agriculture and their projected prices, yields and government payments, USDA believes net returns to land are expected to retreat in the near term, after rising sharply in 2007.

You guessed it, elevated energy prices and production costs are expected to rise sharply and limit profits. Also, crop prices are expected to decline as farmers expand production globally in response to larger '07 and '08 profits.

Timing is everything and crop supplies are expected to rebound. Take wheat for example, as drought conditions ease globally, prices will inch lower.

Commodity forecasts indicate after 2009, increasing demand is expected to hold crop returns steady, if not rise through 2017. Corn and soybean profits are expected to rise steadily from 2010 to 2017. In contrast, wheat profits are expected to remain flat after declining in 2009.

Returning to farmland values, to date agriculture's debt level is up only modestly, but problems could arise if financial leverage climbs and recent profit gains prove temporary.

Unlike the 1970s and 1980s, debt ratios are near historical lows today and farmers and their lenders appear to be judging farm loans on cash flows. So, rising farmland values may be a sign of a bright, new golden age in agriculture; however, there is always risk involved.

John Schlageck, Hoxie, is a commentator on agriculture who writes for the Kansas Farm Bureau