Economist: Good time to be an Indiana farmer

FORT WAYNE — Demands for corn fueled largely by ethanol have boosted prices for farmland and have made it a good time to be a farmer in Indiana, Purdue agricultural economists say.

“I just don’t see the factors that would turn us bearish in the short run,” Chris Hurt told those gathered at last week’s Fort Wayne Farm Show. “We do have a really robust market. Everything’s coming up aces.”

Hurt estimated that corn prices could reach more than $7 a bushel this year, with $15 a bushel for soybeans possible, The News-Sentinel reported. Returns are so strong that prices of $10,000 an acre are being paid for the top farm ground in the state, he said.

He thinks the rising prices of agricultural commodities could support significantly higher land prices, perhaps $6,700 to $7,000 for land that now costs a little more than $5,000 per acre. That 30 percent price increase could come by the first half of 2012, he said.

Juan Sesmero, an assistant professor of agriculture economics at Purdue, told The Journal Gazette that the outlook for corn growers is bright because of the crop’s use in making ethanol. Indiana farmers produce between 4 million to 5 million bushels of corn for the ethanol industry.

James Schriver said that gives him hope his children can join him in the fields.

“It’s always been where you were just barely getting by, but ethanol has changed that,” said Schriver, who owns a farm in Montpelier, about 45 miles south of Fort Wayne. “They can actually make a living at this now.”

A corn glut existed until oil companies started using ethanol-gasoline blends, Schriver said.

“There was more out there than people were eating,” he said.

Sesmero said he believes ethanol will still be needed even as automakers tout electric vehicles.

“There’s no reason to believe it won’t continue in the short, medium and even long term. Nobody knows for sure what oil prices will do, but they are helping ethanol production,” he said.

(Source: http://www.jconline.com/article/20110123/NEWS/110123007/Economist--Good-time-to-be-an-Indiana-farmer)