Good harvest
Estimated value of an acre of average Indiana farm land in June 2006
Area of Indiana Value per acre Percent increase from June 2005
North $3,082 4.2%
Northeast $2,936 3.0%
West Central $3,456 11.3%
Central $3,430 2.2%
Southwest $2,928 17.5%
Southeast $2,711 10.8%
Indiana $3,162 7.4%
Source: June 2006 Purdue Land Survey
After amassing close to 3,500 acres of Northwest Indiana farmland over the past century, the Goetz family is taking a real estate break.
"We're not selling any land and we're not buying any right now," said Matt Goetz, who with his family grows corn and soybeans on a combination of owned and rented acreage east of Valparaiso.
"It's too expensive," Goetz said.
Farmland values are on the rise in Indiana and across the Midwest.
An average acre of Indiana cropland had an estimated value of $3,162 in mid-2006, an increase of 7.4 percent from the same period a year earlier, according to the June 2006 Purdue Land Value Survey.
A survey by the Federal Reserve Bank of Chicago found that in the last quarter of 2006 the value of good-quality farmland shot up by 5 percent across much of Indiana and four other Midwestern states.
In northern Indiana, farmland values climbed by 12 percent between January 2006 and January 2007, the Federal Reserve Bank survey showed.
"Driving that increase is the demand for ethanol," said Chris Hurt, an agricultural economist with Purdue University.
The demand for corn to produce ethanol boosted projected total usage of corn to 11.8 billion bushels in 2006-07, according to the Federal Reserve Bank.
And the shift to faster growth in farmland values coincided with higher corn and soybean prices, which boosted farm income, the Reserve Bank's report said.
Corn prices climbed to nearly $4 a bushel over the winter, after holding steady at an average $2.10 a bushel between 1998 and 2005, Hurt said.
In Northwest Indiana, where farmland has increasingly given way to homes and businesses, developers continue to influence land values, said Rick Niemeyer, a local land broker and livestock auctioneer.
"A tremendous amount of farmland is being bought for investment," Niemeyer said.
Niemeyer said he'd seen one piece of farm ground in incorporated Lake County nearly double in value to close to $8,000 an acre since 2000.
Statewide, the average value of land moving out of agriculture increased by 11 percent in 2006, rising to $9,113 an acre. However, values vary depending on what the land is transitioning into, according to the Purdue Land Value Survey.
Tougher to predict is whether, or for how long, farmland values will continue to rise.
"This is a period of rapid change," agricultural economist Hurt said. "And no one really knows."
Values could continue to increase, "primarily because of the growth of ethanol," Hurt said.
"The single most important factor will be the renewable fuels policy of the U.S. government," Hurt said. "But that's politics, and it's hard knowing where that's going to go."
The Associated Press contributed to this report
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