Farmland values, unlike other sectors of the ag economy, maintained strength around the state so far this year and likely will remain that way into 2021.
That’s according to the mid-year survey of Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) members.
Results of the survey, revealed during a University of Illinois farmdoc webinar Friday, predict stable farmland prices and interest rates though the end of the year with the possibility of slightly lower cash rental rates in 2021.
“The expectation is for stable farmland prices the remainder of the year (with fluctuations within a 3% range). No one sees a cliff,” said Luke Worrell, of Worrell Land Services in Jacksonville (Morgan County), who chairs ISPFMRA’s land values conference. “The second half of the year will likely look a lot like the first.”
Farmland values remained stable, with a 1 to 4% increase in some areas, the first half of the year across the state.
Excellent ground values ranged from an average of $9,600 per acre in northeast Illinois to $11,250 in the west central region of the state the first half of the year. Good quality land prices ranged from $7,861 in the south to $10,227 per acre in the southwest while average quality farmland ranged from $5,400 in the south to $7,277 per acre in the southwest.
“Land values in 2020 have been very unlike other sectors,” Worrell told the RFD Radio Network. “One might expect some crazy fluctuations, but they’ve been steady to firm. In fact, Class A acreage actually saw a jump from 1 to 4% in a couple different regions.”
And that trend could continue for excellent quality farmland.
“Class A acreage the last several years carried the torch for values and we continue to see that,” Worrell said. “The gap is slowly widening between Class A and Class B and C values.”
Worrell believes historically low interest rates remain a key driver of the stable land market in the face of major economic adversity in other parts of the ag sector.
Who’s buying farmland these days? Farmers continue to purchase the most, 61%, followed by local investors (17%), non-local investors (11%) and institutional investors (8%).
“The vast majority of transactions are from what I’d consider local money,” Worrell said.
As for 2021 cash rental rates, the survey suggests a possible decline of around 2.5% for excellent land and 5% for lower quality land.
“This will vary region by region,” Worrell said of cash rents. “I’m not surprised we’re seeing expectations of a mild decline (due to a drop in farm income), but I think it will be more steady than down.”
The National Agricultural Statistics Service (NASS) released its Illinois cash rent county estimates Aug. 28. The statewide rental rate for non-irrigated cropland averaged $221 per acre this year, up from $220 in 2019.
The top three highest cash rent averages in the state are in Macon County ($294 per acre), Sangamon ($292) and Logan ($287) this year while the three lowest averages are in Williamson ($90), Pope ($80) and Johnson ($50) counties.