By MICHELE F. MIHALJEVICH
Indiana Correspondent

FORT WAYNE, Ind. — As farm income rises or falls, so goes the value of farmland, according to the head of an Indiana-based farm management company.

“The key driver in the value of farmland has been and will continue to be farm income,” said F. Howard Halderman, president of Halderman Farm Management Service and Halderman Real Estate Services, both headquartered in Wabash, Ind.

Halderman spoke during the annual Indiana Farm Bureau convention last month in Fort Wayne. Farmland values rose 15 percent annually from 2005 to 2008, he said.

“The market peaked about the time corn hit $7, in June of last year. There were a lot of sales toward the end of the year because of the fear of capital gains tax increases in 2009. Nothing happened in Congress this year, but people are saying it again for next year,” he added.

The drop in crop prices since June 2008 is reflected in a recent Purdue University study, which shows the value of Indiana farmland dropped slightly, by less than half a percent, from June 2008 to June 2009, Halderman said. Farmers and investors have been active in purchasing farmland.

Farmland is attractive to farmers because it gives them control over more acreage and gives them a chance to invest in something they know and understand, he said. “The number of farmers buying farmland has increased rapidly in the last few years. They’re aggressively in the marketplace. A large majority of farmers are buying the farms that we sell.”

Investors find farmland appealing because it’s a solid investment and shows strong capital value growth, Halderman said. Since 1992, farmland returns have averaged 12 percent a year.

Despite concerns, foreign investors have not purchased large quantities of U.S. farmland, he said. “Only 1.6 percent of U.S. farmland is owned by someone not in the United States, and the majority of that is timberland,” he explained. “The majority of those owners are in Canada.

“For all the talk about foreigners coming in and buying up all our farmland, it’s just not true.”

The economy has helped reduce demand for recreational, residential and timberland property, Halderman said. The large decrease in home sales and home construction means demand for timber is down, which affects the cost of timber and the land it’s on, he said.

Using examples of various types of rural land Halderman had offered for sale in late 2008, he said most good, tillable farmland sold above the initial asking price, whereas lesser land, or timberland, sold for less or remained unsold. In the first part of 2009, sales of 55 percent or 35 percent over appraisal were recorded for good, tillable land, he said.

Farmland values could decrease if the strengthening of the value of the dollar continues, if the worldwide recession deepens, if interest rates increase due to inflation or if there is a reduction or withdrawal of biofuel mandates in primary row crops, Halderman said.
“The first two haven’t happened, and the fourth hasn’t changed. Right now, none of these four items has occurred,” he noted.
Villwock reelected

Farm Bureau president Don Villwock was reelected to another term. Villwock has been president of the 277,000-plus member organization since 2002.

During a speech at the convention, he said unfair property taxes, animal extremists and poor commodity market prices, especially for livestock, are among the challenges facing Indiana agriculture. Fixing property taxes is one of the Farm Bureau’s top priorities, he said.

“You know these taxes are not fair, they aren’t equal, and the proposed 1-2-3 caps should not be put into the state constitution,” he stated in a press release.

The fight with animal extremists is far from over, he said. “The educational disconnect between non-farm citizens and farmers is becoming greater all the time,” Villwock said. “These people have not seen, much less visited, a farm for almost a generation.
“The trips to Grandpa and Grandma’s farm are not on anyone’s calendar anymore. The American consumer doesn’t know any farmers, doesn’t know how we raise our livestock or how we produce any of their food, feed, fuel or fiber.”

For too many years, he said, farmers haven’t been aggressive enough in telling agriculture’s story. Now, he said, urban neighbors are being influenced by extremists.

“As Harry Truman once said, ‘If you can’t convince them, confuse them,’” Villwock said, adding that this tactic has been used by animal extremists. But that’s starting to change.

“Beginning last February, the Indiana ag community said ‘Enough is enough.’ We united in our efforts to prepare to win,” he said. “For the first time in my memory, all commodity groups, under the leadership of Indiana Department of Agriculture, came together.
“Indiana’s beef, sheep and pork producer organizations, along with the dairy and poultry associations, combined with the corn and soybean groups, are working hand-in-hand with your Indiana Farm Bureau.”