Farmland values jumped 20% statewide the first half of the year, according to the Illinois Society of Professional Farm Managers and Rural Appraisers’ (ISPFMRA) mid-year survey of members.

It marks just the fourth time since 1970 farmland values exhibited an increase of that magnitude or higher. Results of ISPFMRA’s mid-year survey were released at the 68th annual Farm Progress Show in Decatur.

“What our survey (of more than 100 ISPFMRA members across the state) showed was a large increase across all classifications of land the first half of 2021,” Luke Worrell, of Worrell Land Services in Jacksonville, told the RFD Radio Network.

And the train may not slow down or hop off its tracks any time soon.

More than three-quarters of ISPFMRA survey respondents (78%) predict farmland prices could increase up to 3% or more the rest of the year. The remaining 22% predict farmland prices will hold steady.

“In addition to the 20% increase we’ve already seen, we have a large number of participants in the survey who foresee continued growth in the second half (of 2021),” Worrell said. “In fact, zero people expect (farmland values) to go down in the second half.”

What’s causing the historic runup in the farmland market?

“I think supply and demand is out of whack. There’s not as many transactions,” Worrell noted. “We’ve also got low interest rates and strong commodity prices.

“And, anytime you’re dealing with uncertainty in the world, demand for tangible assets is strong,” he continued. “Some would call it a perfect storm.”

The historic boost in farmland values isn’t limited to Illinois. Record values were recently reported in Indiana and Iowa as well.

Cash rental rates are also climbing as a result.

Nationally, farmers paid an average of $141 per acre for cash rent in 2021, up $7 from the five-year average, according to recent USDA estimates.

Cash rental rates were highest in Iowa ($233 per acre) followed by Illinois ($227, up $5 from last year) and Indiana ($200, up $6) for 2021. The jump in Illinois still remains below the all-time high of $234 posted in 2013.

ISPFMRA members predict cash rental rates for 2022 could increase another 11% compared to this year.

“Cash rents will be having upward pressure,” Gary Schnitkey, University of Illinois professor of farm management and Soybean Industry Chair in Ag Strategy, told RFD. “I don’t think we’ll see a (corresponding) 20% increase, but I’d look for the average rent in central Illinois to increase around $15 per acre. There could be a lot of professionally managed land much higher than that.”

If realized, the higher rents and input costs will squeeze farm margins. The U of I recently projected record-high, non-land costs for corn and soybeans in Illinois for 2022.

“We’re seeing all costs go up, so the cost structure for 2022 will be much higher,” Schnitkey said. “The question is, how long will higher commodity prices last?”