Signs of Covid-19 collapsing farmland prices in Indiana
Farm managers, land brokers, appraisers and other professionals attribute a slight decline in Indiana farmland values to the first half of the year, a trend expected to continue through the winter , to the disruptions accompanying the novel coronavirus, Purdue University said Thursday. “The COVID-19 pandemic will be the defining economic event of 2020,” Purdue’s annual farmland report said.
“Everyone is hoping for a quick economic recovery, but the extent to which COVID-19 will impact land values remains to be seen,” said Associate Professor Todd Kuethe, who oversaw the survey. “Given the disruptions in the food value chain and the deep economic uncertainty, it is difficult to predict what the next year will bring. [the] Indiana Farmland Market.
On average, farmland values in the state in June were higher than in June 2019, according to the survey. But the values of premium, medium and poor land have fallen 1 to 2 percentage points since last December, and further declines are expected. For example, average quality land yielding 180 bushels per acre — similar to the USDA’s forecast for nationwide corn yields this year — was worth $7,011 per acre statewide last June, rose to $7,361 per acre in December, but then fell to $7,236 per acre last month. It would fall again, to $7,089 at the end of 2020, in the opinion of the property professionals participating in the survey.
Low interest rates are the main factor supporting property values. “Right now, the price of corn doesn’t matter — it’s all about interest rates,” said one survey respondent. The three influences that would lower land values are farm income levels, crop prices and livestock prices. “In each case, respondents have become more negative as market disruptions and uncertainty put downward pressure on current farmland values,” the report said.
The USDA says cropland values have slowly softened since 2015 in the five corn belt states of Illinois, Indiana, Iowa, Missouri and Ohio. The average acre of cropland in the region was worth $6,360 in 2019, up from $6,700 in 2015, according to the annual Land Values report. The 2020 report is scheduled for August 6.
To read the Purdue report, click here.