WEST LAFAYETTE, Ind. — The value of Indiana’s farmland continues to increase at a double-digit rate, according to a recent Purdue University survey.

The survey of farm managers and rural appraisers also found that cash rents are up from last year, said Craig L. Dobbins, professor of agricultural economics at Purdue. The survey was conducted Feb. 5. Approximately 30 people participated.

The average price per acre of Hoosier farmland went up 13 percent, to $8,510, from 2012 to 2013, Dobbins said. Cash rents are up about 12 percent, to $278 an acre. Land values have shown double-digit increases yearly since 2010, he added.

“This has been a period of rather dramatic change in agriculture,” Dobbins noted. “Margins in crop production are significantly above where they have been in terms of historical averages. I was not surprised (by the survey results) because the story has consistently been that land values were holding strong, that they were continuing to rise and that the drought had not slowed them at all.”

Last year’s drought probably wasn’t a factor because most farmers viewed it as a one-time event, he explained. “They viewed it as an aberration,” he said. “You don’t plan your life around an aberration. You plan your life based on what you think normal is.”

Land values are tied to commodity prices, Dobbins said. It would take severe economic conditions to trigger a significant drop in values, he said. There doesn’t seem to be a concern among the managers and appraisers about that happening, though.

The staff of Schrader Real Estate & Auction Co., of Columbia City, continues to see prices go up, said R.D. Schrader, company president. The high prices “reflect the profitability in farm income, which is good for most everybody involved in agriculture,” he said.

While land values continue to increase, the rate at which they have gone up each year has decreased, according to Dobbins. From 2010 to 2011, prices went up 23.7 percent. From 2011 to 2012, they increased about 16 percent.

Schrader said the pace of the last couple of years has been hard to sustain. “It’s hard to say if the next 12 months will be as strong as the last 12,” he noted. “Some of the pressure (on buying) has been released.”

Today’s land values are historically high prices in the state, Dobbins said. If adjusted for inflation, they would set a record high, he added. “We are indeed in uncharted territory,” he said.

The news is good or bad, depending on if you’re selling or buying land, Dobbins explained. “If you’re a buyer, this isn’t making your life any easier, as the price just continues to go up,” he said.

“You have to convince yourself if it really is worth it to pay the prices you have to pay. If you’re a seller, or getting ready to sell, your biggest problem is how to manage the capital gains taxes.”

Many buyers continue to be farmers, Schrader explained, adding cash is driving the market, and not debt. “This is where they want to put their cash,” he said.

“As for sellers, there never has been a better time to be a seller. Prices might be better in six months but no one has a crystal ball.”

About 80 percent of those surveyed expect land values to increase or remain steady over the next five years, Dobbins said, while 20 percent anticipate a drop.

Historically, when agriculture has a strong period, it’s followed by a time when margins fall back closer to normal and become tighter, he said. The production of ethanol may help with margins by keeping the demand for corn higher than it was in previous years.

As for cash rents, most of those surveyed said they are higher in 2013, Dobbins said. None said the rates were lower, while six said they remained the same.

Purdue is hosting a daylong workshop on land values March 27 in West Lafayette. Speakers include Dobbins and Chris Hurt, also a professor of agricultural economics at Purdue. The keynote speaker will be Jason Henderson of the Federal Reserve Bank of Kansas City. He will discuss if agriculture’s current prosperity can be maintained.

The Financial Health of Farming and Land Values conference is open to farmers and agribusiness professionals. For more information and to register, visit www.agecon.purdue.edu/commercialag/progevents/financialhealth.html