Land Values Jump by 10 Percent

A fter four years of hardly keeping up with inflation, Indiana cropland values jumped around 10% in the year ending in June 1994 according to the Purdue land values survey. The USDA reported a 7.8% increase for the year ending January 1. Likely causes of strength in the land market include low interest rates (affecting both borrowers and equity investors), generally good yields in Indiana in 1993, better than expected corn and soybean prices and institutional buying of land. Inflation concerns may also have caused additional buying. According to the Purdue survey, this is the seventh consecutive year of increasing Indiana land values. Average quality land values are now 58% above the low levels of 1987 but still nearly a third below the high of 1981. The number of farmland transfers in the 6 months prior to June was estimated to be up by 41% of the respondents versus 30% last year. More land was thought to be on the market by 12% of the respondents compared to 7.5% last year. The combination of more transfers and slightly more land on the market tends to indicate that higher prices have pulled more land into the market.