The value of Illinois farmland rose 2% to 3% the first half of 2013, according to a survey conducted the Illinois Society of Professional Farm Managers and Rural Appraisers and the University of Illinois. "On July 1, farmland prices averaged $13,200 an acre for excellent-quality farmland, $11,200 an acre for good-quality farmland, $9,000 for average-quality land and $8,300 an acre for fair-quality farmland," says survey coordinator Dale Aupperle, AFM, ARA, Heartland Ag Group LTD., Forsyth, Illinois. "This is an increase of 3% for excellent- and good-quality farmland, 2.5% for average-quality farmland and 1.9% for fair-quality land. These are not at the level of increases we've seen in recent years, but they are still upward," he notes.
"There was a tremendous push on land sales at the end of 2012 because of uncertainties concerning income tax treatment in 2013 and beyond," he comments. "This led to a great deal of farmland being sold last year that might have otherwise been available to the market in 2013. As a result, there is still a demand for farmland but not much available for sale." Looking ahead, 23% of survey respondents say they expect the volume of sales in the last half of 2013 to rise compared to the first half of 2013, while 43% expect the volume to remain the same and 34% expect less volume.
The survey, conducted in conjunction with Dr. Gary Schnitkey, University of Illinois farm management specialist, found 73% of farmland buyers are farmers and 12% are local investors.
Survey respondents are divided in how they expect prices will perform over the next 12 months. Twenty percent expect farmland prices will increase, 41% expect prices will remain unchanged and 39% expect farmland prices will decline. Of the 39% expecting a decline, 77% expect a price decrease from 0% to 5%.
Survey respondents also indicate they expect cash rents to decline slightly for 2014 compared to 2013. Respondents indicate that excellent-quality farmland had an average cash rent of $388 an acre in 2013 and expect that rent to slip to $374 in 2014. Good-quality farmland had a $332 average per acre in 2013 with an expected average in 2014 of $318 an acre. Average-quality farmland had a $318 average per acre in 2013 and is expected to average $278 in 2014. Fair- quality farmland had an average of $224 per acre in 2013 and is expected to average $212 per acre in 2014.
Note: In a normal year, excellent-quality farmland averages more than 190 bushels of corn per acre, good-quality farmland averages between 170 and 190 bushels per acre, average-quality farmland averages between 150 and 170 bushels per acre, and fair-quality farmland averages below 150 bushels per acre.
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