Hoosier Farmland Prices Begin Cracking $10,000 Per Acre
News-Sentinel -- FORT WAYNE, IN -- September 6, 2012 -- Not long ago, few farmers could have imagined spending $10,000 an acre for land unless it lay near spreading suburban development.Now booming land prices are beginning to hit five figures per acre, and a Purdue University analysis of farmland prices finds many reasons to think the rise will continue.
An example is close at hand. In June, a small farm in southern Adams County broke that price threshold when it sold for more $11,600 an acre. That wasn't for land destined for a residential subdivision or a shopping center. It wasn't Amish bidders competing to buy land for their sons, a market quirk in Adams County that has sometimes driven up land prices.
Instead, auctioneer Rob Green of Berne said, the price came from two neighboring farmers striving to add a little more than 100 conveniently located acres to their holdings.
In August, Schrader Real Estate & Auction Company, based in Whitley County, sold a farm in White County in western Indiana for more than $13,000 an acre. Again, that land isn't destined to become an industrial park or a housing development. There were investors among the 27 bidders who competed for that land, but farmers dominated the pack that propelled the price of 79 acres to more than $1 million, the auction company said when it announced the big sale.
Judging from the latest Purdue Agricultural Economics Report, these prices are not outrageous flukes; instead, average prices of the best land is approaching five figures.
According to the report, the best land in northeast Indiana averaged $7,250 per acre in June, up 19 percent from its price in June 2011. In west-central Indiana, the best land averaged $8,949 per acre, up 20 percent from its estimated value in June 2011.
"Robust net farm income, favorable interest rates, strong farmland demand and a limited supply of farmland for sale kept Indiana farmland values ... moving higher," the report said.
Many of the factors that drove prices up in the last year are likely to press farm prices higher, from global demand for farm products to the limited availability of farm land. But the Purdue report warned that there are many turns of fortune that could stop the rise in land prices or send them lower. Those potential brakes on land inflation include a sharp rise in interest rates, another U.S. recession, the emergence of a multiyear drought or the federal government dropping its requirement that fuel distributors blend a certain amount of ethanol, produced from corn, into motor fuels.
(c)2012 The News-Sentinel (Fort Wayne, Ind.)
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