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Sunday, March 25, 2007

Environment - "Farmland values surge as demand fueled by ethanol propels corn prices upward"

Indianapolis Star business writer Jeff Swiatek has a story today headlined "Seeing more green
Farmland values surge as demand fueled by ethanol propels corn prices upward." The story tells how, because of the rising price of corn, the price of farmland is also going up. A quote:

"This is a very exciting period. I've been getting lots of calls" from farmers and landowners, said Alan Miller, a Purdue University Cooperative Extension Service specialist for farm business management.

Prices for land are up because corn, the main row crop grown on U.S. farmland, has risen 60 percent in value in the past year, to $3.32 a bushel last month, thanks to soaring demand for corn from fuel-producing ethanol plants.

Land is appreciating so fast that farmland appraisers and brokers are unsure of current values.
Salyers, a broker with three years of experience for Halderman Farm Management and Real Estate Services, notes with wonder how 120 acres of farm ground sold in Clinton County last month for about $5,000 an acre. That's 16 percent more than comparable cropland a mile away sold for last August, he said.

"With corn prices going up, a lot of optimism is out there now" among farmers and land investors, he said.

With much of Indiana and other parts of the Midwest covered by farm ground, its jump in value is no small event.

For farmers who own ground, their net worth is suddenly higher, raising their borrowing limits and giving them a chance to sell land at prices few expected to see this soon. For investors and other landlords, the jump in prices enables them to charge more rent for their land at a time when rents had stagnated. Cropland rents in Indiana typically run $100 to $150 an acre, depending on quality of the ground.

Read today's story in conjunction with the Business Week Special Report referenced in this ILB entry yesterday.

Posted by Marcia Oddi on March 25, 2007 09:04 AM
Posted to Environment | Indiana economic development