2025 Farmland and Cash Rent Outlook

January 31, 2025

PAER-2025-08

Author: Todd Kuethe, Professor of Agricultural Economics and Schrader Chair in Farmland Economics

Tweet
Share

Print Friendly Version

Farmland Values

This summer, the 2024 Purdue Farmland Values and Cash Rent Survey suggested that Indiana farmland prices once again hit a new record high at $14,392 per acre for top-quality land, $11,630 per acre for average-quality land, and $9,071 per acre for poor-quality land. However, the survey respondents suggested that prices actually peaked in December 2022 and retreated slightly in the first half of 2024. In addition, the respondents expected modest declines for the second half of 2024. The agricultural lender survey conducted by the Federal Reserve Bank of Chicago suggested that farmland prices in Indiana fell by approximately 2% between October 2023 and October 2024. In addition, the most recent iteration of Iowa State University’s land value survey, released in December 2024, found that farmland across Iowa declined by 3.1% between November 2023 and November 2024.

The slight dip in farmland prices at the end of 2024 was driven by lower net farm incomes, reduced crop prices, and higher interest rates. In 2025, there is a potential for further reductions in interest rates, yet the prospect of higher commodity prices remains uncertain. As a result, the outlook for farmland prices is slightly pessimistic. While few expect a drastic decline in farmland prices, many expect modest declines to flattening prices in the coming year.

Cash Rental Rates

The recent 2025 Purdue Crop Cost & Return Guide suggests that the contribution margin, the difference between market returns and variable costs, will decrease relative to 2024 levels for both rotation corn (–27.6%) and rotation soybeans (–29.1%). These declines match similar reductions observed in 2022. Tighter margins suggest downward pressure on cash rental rates, as farmers will have less cash to allocate to labor, investment, and land. Further, in 2024, the contribution margin for rotation corn was below cash rental rates. Similar to the farmland sales market, the cash rental market suggests modest downward pressure on rents.

Go Back to PAER Main Page

Tweet
Share

Tags

Publication Appeared Within:

Purdue Agricultural Economics Report

2025-01 PAER: Outlook 2025

Latest Articles:

The Iran Conflict and Global Food Security: Why the Burden Falls Hardest on the World’s Most Vulnerable

March 31, 2026

When an energy shock ripples out from the Persian Gulf, the headlines focus on oil prices, gasoline costs, implications for value chains and the profit margins of U.S. producers.

READ MORE

The Iran Conflict and Consumer Food Prices: A Broad but Lagged and Sticky Shock

March 31, 2026

The initial public reaction to an oil price shock reaching $110 per barrel is often to project near-immediate, dramatic increases in grocery prices. This instinct overstates the direct farm-to-retail transmission channel in a straightforward and measurable way. The USDA Economic Research Service tracks how each dollar of consumer food spending is distributed across the supply chain in its Food Dollar Series. The picture it reveals is sobering for those who expect large and rapid retail food price responses driven purely by higher farm input costs.

READ MORE

The Iran Conflict, Energy Prices, and U.S. Farm Profitability: A Balanced Assessment

March 31, 2026

The conflict that began on February 28, 2026, with U.S.-Israeli airstrikes on Iran triggered the closure of the Strait of Hormuz — the narrow chokepoint through which approximately 20 percent of the world’s traded oil and significant volumes of liquefied natural gas (LNG) flow. Within days, Brent crude oil surged from roughly $70 per barrel to over $110, the highest level since Russia’s 2022 invasion of Ukraine. Gasoline prices at the pump rose roughly 17 percent in the first two weeks of the conflict, and diesel — the lifeblood of farming operations — followed closely.

READ MORE
Visit Purdue Ag Econ
Visit PAER Main Page