By NANCY VORIS
Indiana Correspondent

INDIANAPOLIS, Ind. — After months of waiting out the recession, investors are again tapping agricultural ground as a valuable investment.

Lee Vermeer, vice president of real estate operations at Farmers National Co. (FNC), said once reliable investors backed out of the land-buying market around November of last year.

“Everyone was trying to figure out the stock market and whether the economy had bottomed out,” he said. “Some believe it has. Now that the uncertainty has subsided, buyers are looking for investments they can feel good about.”

Vermeer said the land market did slow somewhat last fall, but he attributed the slowdown to the drop in commodity prices. During the past six months, owners/operators around the country took advantage in the decline in investor attention and purchased available land to expand their operations. It was that activity that kept land values steady despite the turbulent economy.

“A good indication of the strength of the land market was that even with all the uncertainty and the stress on the market the past six months, land values held,” Vermeer said. “I think that speaks to the quality of the land, but also shows the confidence today’s buyers have in the land market as an investment opportunity.”

In the past few months, he said the market is gaining ground. Roger Hayworth, area sales manager for FNC in Illinois, Indiana and Ohio, explained Type A soils in Indiana are bringing $4,500-$6,000 per acre. He has seen an influx of investor interest in recent months, with some of that interest coming from buyers outside the United States.

Purdue University’s Department of Agricultural Economics does a survey each June and results will be available next month. In general, Purdue economist Craig Dobbins agrees with the FNC report and is anxious for numbers from the Indiana survey to see if they agree. He said the number of sales has slowed down and he would attribute it to both buyers and sellers.

“People keep wondering if there will be a decline in farmland values, because of the squeeze on crop returns,” Dobbins said. “At this time, it is a bit difficult to tell. The survey from the Chicago Fed indicates that there was a decline during the first quarter of 2009, but for year-to-date comparisons, farmland values were still higher.
“The people that I talk to reflect the statements in the FNC article, the value of good farmland has held up fairly well. The value of poor farmland and recreational land does not seem to have fared as well.”

Dobbins also expects the survey to show a decrease in development because of the economy and poor housing market, resulting in less land transitioning out of agriculture.