By Michele F. Mihaljevich

Indiana Correspondent

WEST LAFAYETTE, Ind. – Farmers’ feelings about where they think land values are headed go hand in hand with their views on the overall farm economy and their operations specifically, according to a Purdue University professor of agricultural economics.

“The way you view trends in land values influences every major decision on your farm,” said Michael Langemeier, also director of the Purdue Center for Commercial Agriculture. “That’s not just about buying or renting land. It’s showing up in how you think about risk, investment timing and even your outlook for the next year.

“Land values expectations aren’t just about the land. They’re closely tied to overall confidence in the farm business.”

Langemeier spoke during a Purdue Commercial AgBrief released May 19.

Using data gathered to prepare the March 2026 Purdue University-CME Group Ag Economy Barometer, he said there’s a clear divide forming in how land values are expected to move and what that means for decision making on the farm.

Overall, producer sentiment remains reliably stable, but more interesting is what’s happening beneath the surface, he noted.

When producers are grouped by their farmland value expectations over the next year, a clear split emerges, Langemeier pointed out. Some producers expect land values to increase, but others expect them to decline. Even though both groups are operating in the same farm economy with similar interest rates, input costs and policy uncertainty, their outlooks and decisions look very different, he said.

“One of the clearest differences shows up in financial expectations,” Langemeier explained. “Producers who expect higher land values tend to report stronger expectations for their own financial performance over the near year. They’re also more optimistic about current conditions on their farms.

“On the other hand, producers expecting lower land values are noticeably more cautious, and more pessimistic, with respect to their financial performance. They’re less confident in near-term financial performance and less positive about current conditions.”

Those that are fairly pessimistic with respect to land values are not expected to make as many capital investments while those that are more optimistic are more likely to make such investments, he said.

“That gap matters because what farmers decide to invest in today doesn’t just affect this year,” Langemeier said. “It carries forward into how the farm performs down the road. What we’re seeing is two different responses to the same economic conditions – one more defensive and one more growth oriented.”

Across both groups, high input costs remain the biggest concern, but the intensity of concern is higher among farmers expecting lower land values, he said.

Producers differed in their answers to a question about what they think is influencing farmland values in the area. Those expecting lower land values tend to point to net farm income, Langemeier said, adding that likely reflects pressure, margins and profitability concerns. Those expecting higher land values are more likely to point to alternative investments, such as financial markets or other asset classes competing for capital, he said.

“So, one group is focused on farm income fundamentals while the other is looking more broadly at relative investment returns,” Langemeier said. “Land values aren’t just a market number. They’re tied closely to how you’re thinking about risk, cash flow and whether now is the right time to invest or hold back. It’s whether your decisions are being driven by your own farm numbers or what you think the market is going to do next.”

About 10 percent of respondents to the March ag economy barometer survey expected land values to be lower over the next 12 months, while 35 percent expected them to be higher, according to a survey summary from Langemeier and Joana Colussi, research assistant professor of agricultural economics at Purdue.

The respondents who expect land values to decline over the next 12 months are less optimistic about land values five years from now, the authors said. They also tend to be less optimistic about the direction the U.S. is headed.