Indiana Farmland Values Up, Says Purdue Study

A yearly Purdue University study says farmland values are increasing in Indiana – but that may not be what farmers want to hear in times of a trade war.  As Indiana Public Broadcasting’s Samantha Horton reports, the slight statewide increase in farmland values and cash rents from previous years surprised at least one of the survey’s authors who anticipated the opposite.

The Purdue Land Value Survey suggests farms are becoming more valuable. But with crop yields higher than demand and international tariffs further hurting sales, the higher property taxes that could be charged to farmers as a result of more expensive land may come as an unwelcome development.

“Increase in farmland values coupled with stable to lower prices, if you have to borrow money, it’s going to be more difficult to make that purchase,” says Purdue agricultural economics professor Craig Dobbins.

The survey polls from several groups of agriculture professionals, who this year say many factors are working against farmers, including agricultural policy, interest rates and crop and livestock prices. Inflation and a small supply of farmland are the two forces respondents saw raising prices. Due to those observations, Dobbins was surprised farms are seen as more valuable this year than last.

“In this year’s report, there were only two things that had a positive influence,” he says. “And so again, collecting bad news? I just thought that things would be flat to down rather than up a little bit.”

And while values may be up slightly, Dobbins doesn’t expect to see a surge in farmland sales.

“Observations around the number of sales of farms is down from what it was,” he says. “The amount of land that’s on the market is often pointed to as the reason why farm values are as high as they are now.”

With the U.S. embarking on a much different trade policy than in the past, Dobbins adds it’s hard to tell if the increase in value will continue next year.

“So right now we have a much more risky environment and so what happens in the future is really hard to know,” he says.

That lack of sales dovetails with the Indiana real estate market generally, where a small supply of houses is driving prices up and forcing some prospective purchasers out of the market.