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Farmland Prices Made 'Tremendous Move' Upward During 2011 Farmland Prices Made 'Tremendous Move' Upward During 2011 Originally Appeared On:"news-gazette.com" By Don Dodson Mon, 03/26/2012 Illinois farmland prices jumped about 20 percent on average during 2011, according to a recently released report from the Illinois Society of Professional Farm Managers and Rural Appraisers. "A good part of this tremendous move in Illinois crop land values is based on increasing farm-income returns and expectations of strong income into the future," said Don McCabe of Soy Capital Ag Services, who was general chairman for the annual land values survey. The price-increase percentage held true across various land classes, said Gary Schnitkey, a University of Illinois professor of agriculture and consumer economics. Farmland with excellent productivity was estimated at $8,690 an acre at the beginning of 2011. But by year's end, it had risen to $10,460 per acre by year's end. Similar increases were seen for other grades of farmland: — Good-productivity land rose from $7,490 to $8,980 an acre. — Average-productivity land surged from $6,080 to $7,330 an acre. — Fair-productivity land climbed from $4,880 to $5,900 an acre. The percentage increases were large, compared with past years. Between 1970 and 2011, the average yearly increase was 6.7 percent. But increases have been higher in recent years. From 2005 to 2011, the average yearly increase was 12 percent. Generally, the top amounts being paid for Illinois farmland were in the $10,000- to $13,000-per-acre range. The top price of $13,000 per acre was paid for 37.7 acres in Christian County in November, the society said. Cash rents for farmland are also going up. Schnitkey said rents for excellent-quality farmland rose from $319 an acre last year to $379 an acre this year. Among observations made by the society: — Land values and lease trends are expected to remain strong as long as crop-income levels remain steady or increase. — Almost every county in the state had instances of a record new high price per acre for farmland. — Some "prestige" geographic areas show stronger prices than other areas with similarly productive farmland. But places where land can be bought at lower prices, relative to productivity, are "few and far between." — Farmers make up the majority of buyers. Often those buyers are adjoining landowners or current tenants. — Wind-farm activity continues to boost land values. But changes in tax, policy and funding have slowed the progress of many wind projects. — Improved crop genetics have increased yields, while reducing year-to-year variability in yields. That has improved the earning potential for lower grades of land. — Traditional fixed cash-rent leases accounted for 32 percent of all farm operating arrangements this year, up from previous years. The other 68 percent of operating arrangements include features where the landowner shares in crop production and price risk, being rewarded when yields and prices are good. The survey results were released last week by the society at its annual Land Values Conference in Bloomington.
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