Farmers continue to feel an economic pinch caused by lower commodity prices and higher input costs.
But the downturn in farm income hasn’t had near the effect on land prices as some expected — at least not to this point.
Seth Baker, newly elected president of the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA), continues to see steady farmland values to start 2020.
“Farmland prices are strong and there’s even certain areas where they’ve been up,” Baker said at ISPFMRA’s annual meeting this month in East Peoria. “I would not have predicted that coming into (last) fall.”
The group will provide the latest sale information and regional land values from around the state with the release of its 2020 Illinois Land Values and Lease Trends Report. That report comes out March 19 at the Illinois Land Values Conference in Bloomington. Visit the website for more information.
Drivers of farmland values include a tight supply and low interest rates.
However, farm returns continue to slip for the most part, based on USDA’s latest estimates.
USDA forecast net cash farm income could decrease by $10.9 billion this year to .6 of a percent below the 2000-18 average.
Net farm income, on the other hand, could rise $3.1 billion to $96.7 billion in 2020. If realized, it would still be 30.5% below the 2013 peak.
The divergence between the two forecasts reflects how net sales from inventories are treated. Net cash income records income in the year sales occur, while net farm income counts it in the year the production occurs. Regardless, neither reflects a rosy income outlook.
“The land market has been strong compared to some income from farms,” Baker said. “Obviously, (farmers) had a rougher year (in 2019) with yields. The weather caused a lot of problems.
“It (the farmland market) is not as strong as it’s peak in 2013-14 but, for about four years, it’s been pretty steady,” he noted. “That’s good to see. It provides a lot of support to balance sheets.”
USDA predicts the value of farm assets this year could increase 1.3% to $3.13 trillion, reflecting an anticipated 1.4% rise in farm sector real estate value.
Baker, owner/president of Field Level Agriculture in Mount Zion (Macon County), grew up on a farm in Logan County. He’s worked in farm management for more than 20 years and became active in ISPFMRA when he was a student at the University of Illinois.
“One of my main priorities (as ISPFMRA president) is to take a look at things happening in agriculture,” he said. “It’s changing faster and faster. We have to make sure membership is keeping up and continues to be on the cutting edge.”
Technology continues to transform farm management and crop output while factors, such as the addition of wind and solar farms, a growing number of absentee landlords in some areas and advancements in drainage, can affect the farmland market.