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What's Happening in the Hoosier State

Indiana Farmland

Farm mortgage debt has been increasing; it’s too soon to know the impact of carbon sequestration on land values; and farmland continues to appreciate. Those were some of the themes explained by Dr. Todd Kuethe, Purdue University associate professor in the department of agricultural economics.

Kuethe was one of the featured speakers at the Midwest Agriculture Conference sponsored by the Federal Reserve Bank of Chicago on November 28th.

Kuethe -- an agricultural economist who specializes in farm real estate, policy and agricultural finance -- formerly worked for the Federal Reserve Bank of Chicago, as well as the Federal Reserve Bank of Kansas City.

(Dr. Todd Kuethe, Schrader Chair in Farmland Economics at Purdue University.)

“The key takeaway is that farm real estate is a big component of the financial condition right now,” Kuethe explained to the audience. Real estate comprises 80% of the value of farm sector assets, Kuethe’s research has found.

Those assets, he said, can be substantial with the average Indiana farm valued at $1.7 million.

Indiana’s top crops (based on cash receipts)

1. Corn

2. Soybeans

3. Hay

4. Wheat

5. Melons

6. Pumpkins

7. Mints

(Source: USDA Value of Production)

However, Kuethe says, assets don’t necessarily make a landowner feel rich. “We have people who, sort of, live poor but are wealthy.”

“The principal issue of farming has always been…and probably always will be…relatively low and variable returns, in sort of an annual income sense. But the assets themselves appreciate quite a bit, right?” Kuethe said.

He provided a breakdown of farmland values in Indiana, based on the quality of the land.

Indiana Farmland Values

o Top quality land: $13,739 per acre

o Average quality land: $11,210 per acre

o Poor quality land: $8,689 per acre

Kuethe tracks land values in a yearly report, the Purdue Farmland Value and Cash Rents Survey. Higher quality farmland, according to the survey, fared better year-to-year.

Indiana Farmland Value Increase

o Top quality land: +7.3%

o Average quality land: +5.8%

o Poor quality land: 0.7%

Higher interest rates made their impact felt in farmland appreciation rates, particularly for those landowners purchasing via borrowing.

“While farmland prices reached a new peak in 2023, the appreciation rate from 2022 to 2023 was much lower than the record high price growth observed between 2021 and 2022,” Kuethe said in the report’s summary. “Farm incomes and liquidity are playing a role in boosting price growth; however, rising interest rates continue to put downward pressure on purchases financed through mortgages.”

Information about cash rents in the state is a little more difficult to collect, Kuethe said.

Landowners don’t always want others to know for competitive reasons. But Kuethe provided some data during his presentation at the Midwest Agriculture Conference.

Indiana Cash Rent

o Top quality land: $306 per acre

o Average quality land: $257 per acre

o Poor quality land: $212 per acre

The yearly growth in appreciation for cash rents in Indiana fell short compared to the increase in overall land values. However, all three land quality levels went up between 2022 and 2023, according to Kuethe’s research.

Here is how his report summarizes the changes, along with perspective when compared to other geographic regions:

“Statewide cash rents increased by a modest amount between 2022 and 2023; yet, in nominal terms, all three quality grades are at an all-time high. Per acre cash rental rates for top, average, and poor-quality land exceeded the previous highs set in 2013, 2014, and 2021. Indiana per acre cash rent for top quality land increased by 1.99% to $306. Cash rental rates for average and poor-quality land increased by 2.09% and 2.50% to $257 and $212, respectively.

Kuethe says that it’s important to note that these modest changes at the state level mask some of the larger variation across land qualities and regions. For example, cash rental rates grew by 32.8% to 47.2% in the Southeast region for top, average, and poor-quality land, but cash rental rates fell by –2.2% to –10.7% in the Southwest region. The highest cash rents, across all three quality grades, were observed in the West Central region. Across all regions and quality grades, rent as share of land value (the capitalization rate) held relatively steady between 2022 and 2023.”

RELATED: Kuethe joins colleagues for a deeper look at Indiana cash rents in this podcast. Listen here.

During the conference, Kuethe said that he expects overall farmland income in 2023 to be higher than original USDA predictions. Those forecasts, he said, tend to be lower than final estimates. Although, incomes could still be lower than 2022.

He also doesn’t yet know the impact that carbon capture projects could have on farmland values. “One of those frontier issues,” Kuethe said of the emerging industry. “To be honest, I don’t think that we have really seen it yet…It just really hasn’t matured.”


American Farmland Owner Hayfields mountains


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