Prices paid for Illinois farmland continue upward ascent
Prices being paid for Illinois farmland continued their upward ascent during 2012 and are expected to continue to rise into the foreseeable future, according to the 2013 Illinois Land Values and Lease Trends Report released at the Illinois Land Values Conference sponsored by the Illinois Society of Professional Farm Managers and Rural Appraisers.
“The price of Excellent productivity farmland was estimated at $10,510 per acre price on January 1, 2012 and $12,670 per acre price on December 31, 2012, an increase of 21 percent during the year,” says Dale Aupperle, AFM, ARA, general chairman for the annual Land Values Report program sponsored by the Society. “Good quality farmland price was estimated at $8,980 at the beginning of the year and $10,500 at the end of the year, an increase of 17 percent. Average farmland price was $7,560 per acre at the beginning of year and $8,770 at the end of year, an increase of 16 percent. And Fair productivity price was $5,980 at the beginning of the year and $6,980 at the end of the year, indicating a price increase of 17 percent.”
The survey was done late in 2012 and early in 2013 by members and affiliates of the organization and reflects activity across the state throughout 2012. The data were compiled by Bruce Sherrick, Ph.D. at the University of Illinois and Gary Schnitkey, Ph.D., also with the University’s Colleges of ACES.
“Land price increases in 2012 were comparable to 2011 increases, when all land classes has close to a 20 percent increase. Increases in 2011 and 2012 were above average. Average yearly increases in land prices averaged 7.0 percent across all of Illinois between 1970 and 2012.” Schnitkey explains. Yearly increases averaged 12 percent from 2006 to 2012.
The drivers supporting the higher prices are many, Aupperle states. “Leading the way are prices being paid for corn and soybeans. Mother Nature slashed corn and soybean yields in 2012 which resulted in skyrocketing grain prices. $7.00 to $8.00 per bushel corn and $15.00 to $18.00 per bushel soybeans were significant and offset much of the yield drop,” he notes.
“Farmland truly is what it earns! Net farm income across Illinois was stable-to-increasing this past year due to higher commodity prices and the payouts from crop insurance programs,” Aupperle continues.
No Slowdown In Sight
“Most survey respondents expect farmland prices to increase in 2013,” Schnitkey says. Forty-seven percent of respondents expect farmland prices to increase, with 11 percent expecting prices to rise more than 5 percent and 36 percent expecting prices to rise between 1 and 5 percent. Of the respondents, 23 percent expect farmland prices to remain the same while 9 percent expect farmland prices to decline. “However,” Schnitkey adds, “price increase expectations are more cautious for 2013 as compared to similar responses last year for 2012. When asked last year, over 63 percent of respondents expected prices to increase for the coming year. This year, only 47 percent expect price to rise in the coming year.