A survey indicating that farmland values are expected to continue increasing is more good news for landowners, but could also signal caution for buyers, an agricultural economist says. 

The survey was conducted at the winter meeting of the Indiana Chapter of Farm Managers and Rural Appraisers. The results come on the heels of a February 2012 issue of AgLetter in which the Federal Reserve Bank of Chicago indicated farmland values in Iowa, and parts of Indiana, Michigan, Wisconsin and Illinois have increased by 22 percent since early 2011. That is the largest annual increase since 1976.

"These numbers tell us that the farmland market is very competitive. There are far more buyers than sellers," said Craig Dobbins, Purdue Extension agricultural economist. "People in the market to buy farmland have a very optimistic outlook about the future, and they are willing to pay unthinkable prices."

According to the survey of 32 farm managers and rural appraisers from 25 Indiana counties, the average estimated price of farmland was $7,533 per acre, and all of the respondents indicated their estimated price was higher than the value in February 2011.

While the increases are good news for landowners, Dobbins said there are dangers associated with paying exceptionally high prices to own farmland.

"One of the dangers is that buyers' expectations about the future of the market could be wrong," he said. "If land values or commodity prices decrease, that can really change profit margins. And it doesn't have to be a drastic decrease."