U.S. farmland values this year dropped in value for only the second time since the 1980s farm crisis prompted a wave of foreclosures, drawing warnings of harder times ahead.
The trend hasn't yet hit Indiana, according to the latest numbers from the U.S. Department of Agriculture, but numbers from a Purdue University survey released earlier this month say otherwise.
Farmland values in the lower 48 states, including land used for crops and for livestock, declined $10 per acre, to $3,010 an acre, the first drop since 2009, the USDA said Friday in a report. Cropland declined 1 percent, to $4,090 an acre, while pastureland was unchanged, at $1,330 an acre.
In Indiana, the USDA said farm real estate in Indiana was valued at an average of $7,150 acre, no change from a year ago. Indiana's cropland value was unchanged at $7,000 per acre and pasture land was unchanged at $2,600 per acre.
The 2016 Purdue Farmland Value Survey, released Aug. 3, found average declines in Indiana of 8.2 percent to 8.7 percent from last year, depending on land quality. The survey said that over the past two years, the average farmland value in Indiana has fallen about 13 percent.
According to the USDA, farm income has slumped since 2013, but land values had so far held out even as crop prices tumbled. Now, the trend in land prices is likely to be similar to the 1980s, when values fell for three years, said Brent Gloy, an agricultural economist at Purdue University in West Lafayette and a farmer in southwest Nebraska. While the current skid may not match the magnitude of that slump, the decline probably will continue, he said.
“It’s going to be soft for another year, at least,” he said. “We haven’t worked through the magnitude of the drop in commodity prices.”
Losses were highest in the Northern Plains, according to USDA numbers. The biggest drop was in Kansas, down 7.4 percent, to $1,880 an acre. The Corn Belt remained the most-expensive region, even as prices fell 0.9 percent, to $6,290 an acre. Rhode Island is the costliest state to own farmland, at $13,800 an acre, while New Mexico is cheapest, at $520 an acre.
Declines have been mostly "measured," said Randy Dickhut, senior vice president for real estate at Farmers National Company in Omaha, Nebraska, which manages more than 5,000 farms and ranches in 26 states.
"Demand is lower, but supply is also lower," which is keeping prices from falling more dramatically, he said. Higher-yielding land is tending to hold prices better than lower-quality land put into production during the crop boom, he added.
Still, farmers and investors have largely come to grips that the days of steep price runups are over, he said. “Sellers have to be more realistic about what they’ll get for their land,” he said.
Corn and soybeans, the two most-valuable U.S. crops, have dropped from records in 2012. As of Friday, the grain fell 61 percent, to $3.3425 a bushel, from the all-time high of $8.49, while the oilseed declined 45 percent.
In February, the USDA said declining commodity prices will push farm income down 2.8 percent, to $54.8 billion this year, less than half the 2013 record.
The next forecast on income is set for Aug. 30.