Farmland values in Indiana have risen 14 to 18 percent in the past year, Purdue University said this week.
The same trend holds true in northeast Indiana, according to a leading broker of farm ground.
High grain prices and interest from non-farm investors are driving land prices higher, said Allen Holman of Action Realty in St. Joe.
Holman is working with land sales near Butler in the range of $6,000 per acre, he said this week.
“A year ago, you couldn’t have got $4,500 for that ground,” he said.
Holman also is selling a farm tract for $5,500 per acre that last year would have brought only $4,700, he added.
Land in northeast Indiana is selling for slightly less than the state averages reported by Purdue’s June survey, however. Purdue said statewide, the average value of bare Indiana cropland ranged from $5,013 per acre for poor-quality land to $7,704 per acre for top-quality land. Purdue defined the average long-term corn yields for poor, average and top land as 126, 159 and 192 bushels per acre.
Although this year’s corn crop is poor due to the 2012 drought, “The beans have really come on because of the rains we’ve had. We’re going to have a great bean crop here with a great price,” Holman said.
“I’ve never seen prices like this in my lifetime” for crops, Holman said. “Why would a guy want to sell his ground now?”
Adding to the demand for farmland, “We have investors coming into the marketplace,” Holman said. Those investors are deciding that land is a better and safer investment than stocks.
Investors who buy land will let local farmers farm it on a cash rental basis. Holman said annual rent is running about $150 per acre, and as high as $200-$235 in northeast Indiana.
Amish farmers from the Grabill area are buying land in southeastern DeKalb County, adding to the local demand, Holman said. He estimated they can buy land in DeKalb County at about half the price of land near Grabill.
“It’s not that the ground’s twice as good down there,” Holman said. Overcrowding has created high demand, pushing prices in the Grabill area to between $10,000-$12,000 per acre, he said.
Purdue’s Craig Dobbins said many people thought crop production margins and farmland values would level out or even decline this year. Instead, the season-long drought hiked grain prices, and the prospects of higher grain prices in the next two years led to higher farmland values.
“For the landowners, the increase is generally a good thing,” Dobbins said. “It makes the asset that much more valuable and if they are thinking about selling it, they can sell it for a good price.
“If you’re someone who is trying to start out or get into farming, this news isn’t all that good. It just makes it more difficult to make a farmland purchase.”
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