Many land auctions take place after crops are out of the ground, and prices could be dependent on the coronavirus.
(Seth Tackett, WFIU/WTIU News)
COVID-19 has injected uncertainty into just about every aspect of life and that includes agriculture.
An annual study from agricultural economists at Purdue University revealed farmland prices in Indiana were increasing until the coronavirus pandemic injected uncertainty.
While income from rented land has stayed constant--around three percent--in recent years, the value of farmland increased by at least 5 percent before the coronavirus uprooted consumer habits and the economy.
The uncertainty that’s defined the last six months didn’t cancel those initials gains, but did push prices down between one and two percent for many properties.
That left gains for the year at a modest one to three percent and future declines are expected until pandemic uncertainty is gone.
"Seeing that sort of small decline in aggregate was a little bit surprising," Todd Keuthe an Associate Professor of Agriculture Economics at Purdue University said. "It is a little bit concerning to say, well how long are we going to have this economic disruption associated with the virus, and how long until that really starts to impact the land value markets. It is a real mystery."
According to Kuethe, in years past there has been a stark difference in the value of high-quality farmlandcompared with lower quality land.This year, that wasn’t the case.
"We didn’t have that much variability around the state," he said. "But this year, we saw a real kind of convergence across those dimensions."
Keuthe and others say the majority of farmland purchases take place in the winter months, so the presence of therapies, treatments or coronavirus vaccines could play a role in next year’s prices.
To further complicate prices, other outside factors, such as trade, also play a role in valuation. The latest projections show President Trump’s Chinese trade deal is falling short of expectations which will likely have a downward impact on the price as well.
