July 23, 2020

2020-07 Purdue Agricultural Economics Report (PAER)

by Todd Kuethe, Craig Dobbins, Michael Langemeier, Jayson Lusk, and Kami Goodwin

The 2020 Purdue Farmland Value and Cash Rents Survey suggests that farmland prices across Indiana improved since the June 2019 survey; however, many of those gains occurred between June and December 2019. Since then farmland prices have declined modestly.

The strongest year-to-year statewide increase was for poor quality land, which was up 6.3%, top quality land was up 4.5%, and average quality land was up 3.2%. Between June and December 2019, top, average, and poor quality farmland values increased by 5.5%, 5.0%, and 8.7%, respectively; yet, between December 2019 and June 2020, top, average, and poor quality farmland values posted modest declines of 1.0%, 1.7%, and 2.2%.

Todd H. Kuethe, Purdue associate professor and Schrader Endowed Chair in Farmland Economics and survey author, said, many of the survey’s respondents emphasized the uncertainty related to the current COVID-19 pandemic.

“Given the disruptions across the food value chain and deep economic uncertainty, it is difficult to posit what the next year has in store for Indiana farmland market,” said Kuethe. “The COVID-19 pandemic is a global phenomenon that will likely continue to disrupt trade patterns and income flows around the world. Everyone is hoping for a quick economic recovery, but the degree to which COVID-19 will impact land values is yet to be seen.”

Statewide cash rental rates also increased across all land quality classes in 2020. The largest increase was in low quality land which increased by 5.4%, average quality increased 4.8%, and top quality land increased 4%.

For more in depth analysis on the survey, the Purdue Center for Commercial Agriculture will host a free webinar Friday, August 7, 2020 from 3:30 – 4:30 P.M. EDT. Join Purdue agricultural economists Todd Kuethe, James Mintert and Michael Langemeier as they breakdown the Purdue Farmland Values Survey and USDA Land Values report, discuss marketing strategies for 2020 corn and soybean crops, and make projections for 2021 corn and soybean returns.

The Purdue Farmland Value and Cash Rent Survey is conducted each June by the department of agricultural economics and published in the Purdue Agricultural Economics Report. The survey is produced through the cooperation of numerous professionals knowledgeable of Indiana’s farmland market. These professionals provided an estimate of the market value for bare poor, average, and top quality farmland in December 2019, June 2020, and a forecast value for December 2020.

 

Writer: Kami Goodwin, kami@purdue.edu

Source: Todd H. Kuethe, tkuethe@purdue.edu

 

Official Purdue University News release: https://www.purdue.edu/newsroom/releases/2020/Q3/indiana-farmland-values-increase,-but-signs-point-to-potential-covid-19-slump.html

ARTICLES WITHIN PUBLICATION:

Indiana Farmland Values Increase But Signal Concern of Potential COVID-19 Slump

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Farmland prices have declined approximately 15 percent since 2014. However, farmland prices remain substantially above historical prices. For example, farmland prices in 2020 in West Central Indiana are 63% higher than they were in 2010 and 255% higher than they were in 2000 (for current land values see Kuethe and Dobbins, in this edition of…

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