WEST LAFAYETTE — The Purdue Farmland Value and Cash Rents Survey suggests Indiana farmland prices grew at a record pace between June 2021 and June 2022, exceeding previous highs set in 2021.
Statewide, top-quality farmland averaged $12,808 per acre, up 30.9% from the same time last year. The average per acre price of average-quality farmland similarly increased by 30.1% to $10,598. Poor quality farmland prices exhibited the largest 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, Purdue associate professor and the Schrader Endowed Chair in Farmland Economics and survey author. “However, rising interest rates are associated with increased costs of borrowing, which put downward pressure on purchases financed through mortgages.”
Statewide cash rental rates also increased across all land quality classes in 2022. Average cash rents increased by 11.5% for top-quality land, 10.8% for average-quality land and 13.2% for poor-quality land. The increases in cash rents were the highest observed since the 2011–2012 period. Across the three quality grades, cash rents also reached a record high in 2022 at $300 per acre for high-quality farmland, $252 for average-quality, and $207 for poor-quality land. 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%). Across all three quality grades, the highest per acre average cash rent was observed in the West Central region.
While rental rates across all three quality grades increased in almost all regions, the cash rental rates grew at a slower rate than market prices. As a result, rent as a share of land value declined relative to 2021.
The price appreciation rates for farmland transitioning out of agricultural production or sold for recreational purposes surpassed the previous record growth rates observed in 2011. Statewide, the average price of transitional land was up 36.5% from June 2021, with an average price per acre of $24,240. Recreational land prices grew by 21.8% to an average per acre price of $9,121. For the remainder of 2022, respondents expect transitional land to increase modestly by 2.3%, while the value of recreational land is expected to hold relatively stable.
For more in-depth analysis on the survey, the Purdue Center for Commercial Agriculture will host a free webinar 1-2 p.m. ET Aug. 24. Join Purdue agricultural economists Kuethe, James Mintert and Michael Langemeier as they break down the Purdue Farmland Values Survey and USDA Land Values report, discuss marketing strategies for 2022 corn and soybean crops, and make projections for 2023 corn and soybean returns. Register for the free webinar at https://purdue.ag/landvalues2022.
Purdue’s Department of Agricultural Economics conducts the Purdue Farmland Value and Cash Rent Survey each June and publishes it in the Purdue Agricultural Economics Report. The survey is produced through the cooperation of numerous professionals knowledgeable of Indiana’s farmland market. These professionals provided an estimate of the market value for bare poor, average, and top-quality farmland in December 2021, June 2022, and a forecast value for December 2022.