WEST LAFAYETTE, Ind. — The 2016 Purdue Farmland Study Value Study shows the average price of land has made the largest decline since the 1980s.
Average year-over-year values for top-quality farmland were down from about $9,000 to $8,500. Average-quality ground dropped to about $7,000 from $7,600 and poor-quality land went from $5,800 to $5,300.
Agricultural economists say land values are weighed down by tighter gross margins caused by a collapse in grain prices. The reasons for tighter margins are the same as the 1980s, but the economic environment could continue to push land values and cash rents down.
For the second year in a row, rent levels that farmers pay have declined and they are expected to decline further next year. Low grain prices, low long-term interest rates and low inflation rates are expected to continue, and could have an adverse effect in the future.