Illinois Farmland Values Continue Upward Spiral
The survey was conducted among farm managers and appraisers and assembled by the University of Illinois. It reflects farmland sales activity and lease trends during 2010.
Published: Mar 16, 2011
High commodity prices and lack of good farmland for sale have kept prices paid for Illinois farmland on its continued upward trek, according to the report issued at the 2011 Illinois Farmland Values Conference in Bloomington today. The annual report is sponsored by the Illinois Society of Professional Farm Managers and Rural Appraisers.
In an executive summary, Don McCabe, AFM, Soy Capital Agricultural Services, Bourbonnais, IL., and general chairman of the event said, "There are two major points coming out of this year’s survey. The most striking is that this crop agriculture is financially strong and Illinois farmland values and lease trends are on the rise.
"The second is that there is more variation between regions, and within regions from higher to lower productivity soils. Economic forces that are pushing the current broad rise in crop returns, rents, and land values are not uniformly affecting categories of farms or areas. Even from farm to farm in similar neighborhoods there can be differences based on lease type, farm operation, and management," he says.
Don McCabe, Soy Capital Ag Services.
He noted increases of 14 percent to 18 percent across northern Illinois for Excellent Productivity and Good Productivity land, respectively. "Values went up between 10 percent to 22 percent for the same types of land across the central part of the state, with even higher increases for lower productivity land across the southern part of the state."
"In general, Illinois farmland values were driven higher by increasing expectations of farm income as the 2010 year progressed and commodity prices increased," McCabe reports. "There is every expectation that this trend will continue in 2011." He notes that farmland values have been supported by investment capital seeking alternatives to other financial assets. "Values are less impacted by demand for alternative real estate uses such as conversion to commercial and residential. These were driving factors in the period 2003 through 2009."
He went on to note that in many areas larger percentage increases for lower productivity land was noted, based on expectations of improving crop returns and absolute increases on lower values resulting in larger percentage growth.
Demand for recreational land is generally soft-to-declining with few sales to support, only showing stability or some strengths in areas very close to population centers. "Aside from the ‘close-in’ effect, comments gathered from all the regions regarding recreational land include descriptions such as declining, or fallen significantly, with the most positive markets being just ‘stable,’" he explains.
Estate sales still account for the majority (57 percent) of reasons land is being sold. Local farmers account for the majority (56 percent) of the buyers.
When asked if they believed that farmland prices would fall more than 20 percent in the next year, none of the respondents believed that the chances were greater than 10 percent while a full 58 percent believed the chance was very small.
Copies of the complete 84-page report can be ordered online at www.ispfmra.org/land-values.html.
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