Indiana farmland values have hit an all-time high after jumping an average of 24 percent from 2010 — a rate of increase not seen since 1977.

According to the 2011 Purdue Farmland Value Survey, statewide increases ranged from 22.8 percent to 25.3 percent because of strong grain prices, low interest rates, strong farmland demand and a limited supply of farmland being brought to the market.

"With high crop demand and prices, the outlook for agriculture is very optimistic relative to other industries," said Purdue Extension agricultural economist Craig Dobbins. "As long as those strong grain profit margins continue, farmland values are likely to increase."

The survey found that the value of poor-quality farmland averaged $4,386 per acre, average-quality farmland $5,468 and top-quality farmland $6,521.

Dobbins said the trend in Indiana's farmland values was common throughout the Midwest and Eastern Corn Belt.

While the news of a strong farmland market may be good for current owners, it presents a continuing challenge to potential buyers or those who rent farmland.

"Cash rents are up about 13 to 14 percent, and those are driven by the same factors as the farmland value increases," Dobbins said. "But because lease arrangements are made up 12 to 16 months prior to harvest, it is difficult for landlords and tenants to determine an appropriate cash rent. "

Because of grain market variability and weather concerns, Dobbins said there has been increased interest by growers and landowners in lease agreements with flexibility in cash rent. In these situations, the final amount of cash rent due would be determined post-harvest.