As if the wet spring and summer weren’t creating enough trouble for Indiana farmers, now comes word from Purdue University that the value of farmland in Indiana has taken a tumble.
According to the 2015 Purdue Land Value and Cash Rent Survey, prices for the state’s top-quality farmland declined by 5.1 percent, from an average of $9,765 an acre in 2014 to $9,266 this year. Farmland considered to be of average quality fell by 3.8 percent, from $7,976 to $7,672, and prices for low-quality land fell 4.8 percent, from $6,160 to $5,863.
Purdue reported that it was the first time since 2009 that all three classes of farmland declined in value in the same year.
Cash rents also fell, the amount paid to rent farmland dropped 2.4 percent for top-quality farmland, 1.3 percent for average land and 2.2 percent for poor land.
Purdue says this is the first time since 1999 — 15 years ago — that cash rents declined in all three categories.
The falling prices come after nearly a decade of constant growth that helped sustain rural areas that endured the economic slump of 2008 and later.
Declines have been attributed to lower commodity prices, which squeeze margins and make farming less profitable.
There is also an anticipation of higher interest rates sometime soon. Low interest rates make borrowing to buy farmland cheaper.
This might not be the end. A lot of the farmers who responded to the Purdue survey expect land values to continue to decrease across the next five years as commodity prices are expected to remain low.
It’s certainly not a disaster yet, but it all goes to prove something that farmers already knew — what floods one year will be in drought another, and no matter how good times might be what goes up will surely come back down.
We wish local farmers good fortune.
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