WEST LAFAYETTE — Indiana farmland prices rose to an all-time high in June, up more than 14 percent from a year ago, according to the annual Purdue Farmland Value and Cash Rent Survey.

Statewide, top-quality farmland averaged $9,785 per acre, up 14.1 percent from the same time last year, the survey shows.

The high growth rate for top-quality farmland was closely followed by the growth in average- and poor-quality farmland prices, which increased by 12.5 percent (to $8,144) and 12.1 percent (to $6,441), respectively.

Across all land quality classes, 2021 per-acre farmland prices exceeded the previous records set in 2014.

In the North Region, which includes La Porte County and 12 others in Northwest Indiana, the average estimated land value was $9,073, up from $8,295 in December 2020 and $8,478 in June 2020, the report shows. The projected land value for December 2021 is $9,636.

“A unique combination of economic forces, including net farm income, expected income growth, crop and livestock prices, interest rates, exports, inflation, alternative investments, U.S. policy, and farmers’ liquidity, all played a major factor in the price increase we’re experiencing,” said Todd Kuethe, Purdue associate professor of Farmland Economics and survey author.

That’s rare, he said.

“Normally we’ll see positive price pressure from one or two market forces; however, this June, survey respondents indicated that all 10 forces we asked them about were putting upward pressure on land values,” he said.

Statewide, cash rental rates increased across all land quality classes in 2021. Average rental rates increased by 3.9 percent for top-quality land, from $259 to $269 per acre. The cash rental rates for average- and poor-quality lands both increased by 4.6 percent to $227 and $183, respectively.

At the regional level, the largest rental rate increases for top- and average-quality land were both in the Southeast region (11.5 percent and 6.4 percent), and the largest rental rate increases for poor-quality land were in the North region (5.5 percent).

Across all three land-quality classes, the highest per-acre cash rent was observed in the West Central region.

Rent as a share of June land value decreased slightly in 2021, suggesting that cash rental rates appreciated slower than farmland prices, Kuethe said.

“Some portion of the difference in appreciation rates between farmland values and cash rents may reflect changes in expectations between fall 2020, when 2021 rents were negotiated, and the 2021 growing season.”

In addition to agricultural production, farm real estate prices are greatly influenced by the potential to develop land to non-agricultural commercial or residential uses, according to the report.

The statewide average value of transitional land was $17,759 per acre, a 17 percent increase from June 2020. Rural land purchased for recreational purposes nearly doubled from $3,876 per acre in 2020 to $7,486 per acre in 2021.

“While respondents expect transitional land prices to continue to appreciate through December 2021, they expect recreational lands to decline in value,” the survey states.

The survey also collects information on the value of farmland moving into rural residences and subdivisions to provide estimates of the value of rural home sites located on a blacktop or well-maintained gravel road with no accessible gas line or city utilities.

“These markets are characterized by a very wide range of values,” the report states, so responses are summarized by median values (dividing a series of ordered numbers in half).

The median value of five-acre home sites also increase in 2021, with median values between $10,375 (Southeast) to $15,000 per acre (Northeast and Southwest). Similar values were observed for 10 acre home sites, ranging from $10,000 (North and Southeast) to $15,000 per acre (Northeast and Southwest).

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