By Michele F. Mihaljevich Indiana Correspondent
WEST LAFAYETTE, Ind. – A key question on the minds of many people in agriculture is if farmland values are declining, according to a speaker at the recent Purdue Top Farmer Conference. “Everybody’s nervous about the decrease in farmland values,” said Aaron Shew, vice president of product and data for Acres, a land value data analytics company. “What we see so far here in Indiana and throughout the core farming regions in the Midwest is that yes, we have seen some softening in the market, particularly in high-priced ground. So, a little bit of softening. I think we’ll see that continue into the next year, kind of see it plateau. Growth has slowed, certainly. I don’t think we’re seeing big dips and big crashes in the farmland market.” Last year’s Purdue Farmland Value and Cash Rent Survey found top quality land in the state averaged about $14,000 per acre, while average quality land was $12,000, and poor quality, $9,000, said Todd H. Kuethe, associate professor and Schrader endowed chair in farmland economics at Purdue University. The survey was conducted in June 2024. Averages in the three categories were up over June 2023. The survey’s respondents said they expected a decline through the end of 2024, but at a modest 1 or 2 percent, Kuethe noted. A survey released by Iowa State University in December said farmland values in the Hawkeye state fell about 3.1 percent from November 2023 to November 2024. Shew and Kuethe, along with Colson Tester, an investment analyst with AcreTrader, spoke during the Jan. 10 conference. They discussed data driven farmland markets. There were fewer sales coming into the end of 2024, Shew said. “There’s a lot of seasonality in farmland transactions. Everybody sells in quarter four and quarter one. If you don’t have to sell during production, you’re not going to. “If you have to sell during the production season you will take a price per tillable (acre) hit. Just know that if you’re going to sell farmland. If you can hold until quarter four, you’re probably going to be better off.” Quite a bit of farmland turned over during the pandemic, he said, sparked in part by low interest rates. Since 2018, land sales have been less volatile in Indiana than in Illinois and Iowa, Shew added. During his presentation, Tester talked about why farmland makes a good investment opportunity for some people. The company serves retail investors, average people who come in wanting to diversify their retirement and other portfolios, he said. Those people invest as little as $15,000 in a farm. Tester said investors consider farmland as an investment alternative to traditional stock and bond portfolios because there’s a finite and shrinking supply of farmland. Farmland also provides a low credit and vacancy risk, and there’s a low correlation to economic or political events. It also provides potential downside protection. “The farmland market stays pretty stable throughout different global disruptions,” he explained. “Farmland returns traditionally have been stable and don’t go negative, whereas your stock and bond portfolio may be pretty volatile.” Even in times of recessions or high inflation like the country has seen the last few years, farmland returns have not gone negative since 1991, Tester pointed out. Values have remained pretty steady and pretty positive, which is a strong value proposition to investors, he said. “Any individual investment is for about five-10 years and then it’s time to return the capital to the investors, hopefully with some appreciation,” Tester said. When an investor is interested in a property, the company does due diligence on the land. He said things they consider when looking at a property include the land’s soil and water, financial profile and geography.
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