Indiana Farmland Value Could Dip
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA Purdue University agricultural economist says Indiana farmland may decrease in value in 2016. Craig Dobbins says the dip will likely be caused by higher interest rates and low crop prices, though any losses should be moderate.
Writing in The Purdue Agricultural Economics Report, Dobbins forecasts farmland values dropping 5-12 percent next year after falling 5.1 percent in 2015. That follows a ten year period where farmland values nearly tripled.
"To date, lower expected returns have likely been the major force weakening the farmland market," writes Dobbins. "While there are still some reports of strong farmland prices, most broad surveys of farmland values in the Midwest consistently indicate that farmland values are declining."
Last year’s losses were primarily due to low commodity prices, according to analysts. The major concern in 2016 could be higher interest rates. Dobbins says cash rents are expected to fall again in 2016, after declining this year for the first time in nearly 30 years.
"In addition to the tight margins faced by farmers in 2015, the wet Indiana spring and summer weather in many areas of the state took its toll in the form of lower yield," says Dobbins. "While some of the yield loss will be offset by crop insurance indemnities, these localized yield losses did not raise fall prices, and thus the crop insurance revenue floor was not nearly as strong as the 2012 Midwest drought."
You can read the full Purdue Agricultural Economics Report by clicking here.