Indiana farmland prices hit record high in 2021

WEST LAFAYETTE, Ind. — Farmland prices across Indiana have risen to all-time highs, according to the Purdue Farmland Value and Cash Rents Survey, which has been conducted since 1974.

Todd Kuethe, Purdue associate professor and the Schrader Endowed Chair in Farmland Economics and survey author, said a unique combination of economic forces — including net farm income, expected income growth, crop and livestock prices, interest rates, exports, inflation, alternative investments, U.S. policy and farmers’ liquidity — all played a major factor in the price increase.

Statewide, top-quality farmland averaged $9,785 per acre, up 14.1% from the same time last year. The high growth rate for top-quality farmland was closely followed by the growth in average- and poor-quality farmland prices, which increased by 12.5% to $8,144 and 12.1% to $6,441, respectively, Kuethe said.

Across all land quality classes, 2021 per-acre farmland prices exceeded the previous records set in 2014.

In 2014, farmland prices were very high, as well, Kuethe said, until they plateaued, but current farmland prices are now above where they were in 2014.

Statewide cash rental rates increased across all land quality classes in 2021. Average rental rates increased by 3.9% for top-quality land, from $259 to $269 per acre.

The cash rental rates for average- and poor-quality lands both increased by 4.6% to $227 and $183, respectively.

“Land is the largest asset that farmers have,” Kuethe said, adding that land makes up 80% of a farm’s value.

Kuethe said farmers use land a lot in collateral borrowing and some farmers use it as their pension so they can rent it out or sell it when they retire.

But farmers considering buying more land need to be cautiously optimistic because the growth in farm prices won’t last forever, he said.

For more in-depth analysis on the survey, the Purdue Center for Commercial Agriculture will host a free webinar from 12:30 to 1:30 p.m. EDT Aug. 20. Register at tinyurl.com/4v9unbsn.