Indiana farmland prices hit a new record high in 2021. That can be good or bad, depending on if you own or want to buy. Farmland price growth is driven by a combination of high expected incomes, low-interest rates, and limited supply to satisfy demand. A unique combination of economic forces led to a new record of high farmland prices in 2021, according to a recent Purdue Land Values and Cash Rent Survey.
Statewide, top-quality farmland averaged $9,785 per acre, up 14.1% from June 2020. 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 for average quality land and 12.1% or $6,441 for poor-quality land. Across all land quality classes, 2021 per acre farmland prices exceeded the previous record set in 2014. Many areas of the state experienced particularly high farmland price increases. The highest growth rates were observed in the Southwest region of 15 counties which include Daviess, Dubois, Gibson, Martin, Pike, Spencer, and Warrick Counties. Prices increased ranging from 20% for average and poor quality land to nearly 28% for top-quality farmland. In 2021, the highest per-acre price for high-quality farmland was here in the Southwest portion of the state. Land value for top-quality land in our local region comes in at $11,696 per acre for June of 2021 compared to $9,150 just one year prior or an increase of just over $2,500 per acre.
Farmland real estate prices are greatly influenced by the potential to develop the land into nonagricultural, commercial or residential uses. As a result, the survey collected information about the price of land moving out of agricultural production. The statewide average value of transitional land was $17,759 per acre, a 17% increase from June 2020. Rural land purchased for recreational purposes nearly doubled from $3,876 per acre in 2020 to $7,486 per acre in 2021.
Statewide cash rental rates increased across all land quality classes in 2021 as well. Statewide average rental rates increased by 3.9% for top-quality land, from $259 to $269 per acre. In the local Southwest region, the rental rate increased 7.1% per acre. The cash rental rates for average and poor quality lands both increased by 4.6% to $227 and $183, respectively.
The Purdue Farmland Value and Cash Rent Survey is created with the contribution of ag professionals including farm managers, rural appraisers, land brokers, agricultural loan officers, farmers, and Farm Service Agency county office directors.
The full Purdue Agricultural Economics Report is available at:
