Farmland values in the Midwest have increased dramatically over the last year, and an Indiana economist says prices could remain high for a while.
A report released by the Federal Reserve Bank of Chicago shows a 25-percent increase in Midwest agricultural land values over the last year and a 29 percent increase in Indiana. That’s the largest gain in more than 30 years. Federal Reserve economist David Oppedahl says one reason for the surge is there has been less farmland available.
“And then you had farmers that were bidding for those scarce acres against each other and didn’t have to use a lot of loans to do it,” he says.
Farmers need fewer loans because recent high corn and soybean prices have increased their profits. Purdue University economist Brent Gloy says increases in demand – from both emerging economies and biofuel users – combined with lower-than-expected yields have led to high commodity prices. But he says farmers looking for land still need to be cautious.
“You’re buying into a time when the expectations are that things are going to be very good for quite some time,” Gloy says. “That’s a tricky time because it may turn out that things don’t end up quite as well.”
Still, Gloy says he thinks commodity prices will remain high for a while.