By Mike Perleberg
(West Lafayette, Ind.) – While corn and soybean crops may not have grown well during the summer drought of 2012, farmland values certainly had no problem blossoming.
A Purdue University Extension Office study released Tuesday shows the value of high-productivity land jumped by 19 percent to more than $9,000 per acre. Average-productivity land increased 17 percent to almost $7,500 per acre. Even poor-productivity land was up by 14.7 percent to $5,750 per acre.
Craig Dobbins, Purdue Extension agricultural economist, says high net farm income, low interest rates and high farmland demand with limited supply combined to send land values upward.
With the increase in land value, cash rents farmers pay to sow and harvest in fields they don’t own also went up. The study showed top-quality land increased by 10.9 percent or $29 per acre. Rent for average-quality land was up by 10.1 percent, or $21 per acre, and rent for poor-quality land was up 9.4 percent, or $15 per acre.
Transitional land was also up 24.4 percent to $10,581 per acre.
"The transitional land market - that is, farmland moving out of agriculture - seems to have sprung back to life," he said. "This is a specialized market, with transitional land value strongly influenced by the planned use and location."
The Purdue Extension survey also found that 43 percent of farmers believe that farmland values will increase by an average 11.7 percent over the next five years. Another 35 percent expected an average decline in values of 12.3 percent. The remaining 22 percent expected no change.