High commodity prices and lack of good quality farmland for sale pressed the value of Illinois farmland sharply higher by the end of 2011, according to a report issued by the Illinois Society of Professional Farm Managers and Rural Appraisers (Society). Each year the Society conducts a survey of its members detailing land value and rental trends across the state. This year's survey found the value of excellent to good quality farmland jumped as much as 14% to 18% across northern Illinois, 10% to 22% across central Illinois and 10% to 33% in southern Illinois.
"There are two major points coming out of this year's survey," stated Don McCabe, AFM, Soy Capital Agricultural Services, Bourbonnais, Ill., and general chair of the 2010 survey. "The most striking is 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 said.
For example, in the collar counties of Chicago, the value of average to fair quality farmland varied from a decrease of 9% to an increase of 5%. "This area is still trying to discover its value following the sharp run up in land values as they shifted from farmland to development potential. That land did not get developed and development potential is now gone for the near future and values are shifting back to farmland value. Another example -- far southern Illinois which noted good quality land rising 10% to 33% and average/fair land jumping 20% to 38%. The survey notes there is no land in the region classified as excellent quality land therefore demand is concentrated on good to average quality ground.
"In general, Illinois farmland values were driven higher by increasing expectations of farm incomes as the 2010 year progressed and commodity prices increased," McCabe noted. "There is every expectation that this trend will continue in 2011 and it certainly has when you look at recent auctions."
Demand for recreational land is generally soft-to-declining with few sales to support an appraisal, 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 explained.
Estate sales still account for the majority (57%) of reason land is being sold. Local farmers account for the majority (56%) of the buyers.
When asked if they believed farmland prices would fall more than 20% in the next year, none of the respondents believed that the chances were greater than 10% while a full 58% believed the chance was very small.
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