The Purdue Farmland Value and Cash Rents Survey revealed Indiana farmland prices increased at a record pace from June 2021 to June 2022, surpassing the previous highs recorded in 2021.
Top-quality farmland across the state averaged $12,808 per acre, coming in 30.9% higher than the same time last year. The average price per acre of average-quality farmland rose 30.1% to $10,598. Poor quality farmland prices displayed the greatest increase of 34.0% to $8,631.
“Multiple factors are influencing the increase in farmland prices, including positive net farm incomes, relatively strong commodity prices, inflation and high farmer liquidity,” said Todd H. Kuethe, associate professor at Purdue, in a release. “However, rising interest rates are associated with increased costs of borrowing, which put downward pressure on purchases financed through mortgages.”
Cash rental rates across all land quality classes have also risen this year. Average cash rents for top-quality land grew 11.5%, average-quality land increased 10.8% and poor-quality land went up 13.2%. These cash rent increases were the highest observed since 2011-2012.
Cash rents hit a record high across the three quality grades this year. High-quality farmland went for $300 per acre, average-quality for $252 per acre and poor-quality land for $207.
“At the regional level, the largest cash rental rate increases for top- and average-quality land were in the Northeast (21.3% and 13.2%, respectively), and the largest increase for poor-quality land was in the Southwest region (18.6%),” shared the release.
Among the three quality grades, the West Central region had the greatest per acre average cash rent.
Although rental rates for all three quality grades rose in nearly all areas, the cash rental rates increased at a slower rate compared to market prices. Therefore, rent as a share of land value decreased relative to 2021.
Farmland moving away from agricultural production or sold for the purpose of recreation exceeded the past record growth rates from 2011. The average price recorded for transitional land statewide increased 36.5% since June 2021, with the average price per acre coming to $24,240. Recreational land prices rose 21.8%, settling at an average of $9,121 per acre.
Respondents predict a two-point-three percent increase for transitional land throughout the remainder of 2022. The value of recreational land is predicted to hold relatively stable.
Read More:
Farmer Sentiment Continues to Fall According to the Ag Economy Barometer
Purdue Agricultural Economists Highlight Inflation and Pandemic-related Uncertainties
Farmer Sentiment Increases, but Anxiety Hangs in the Distance
