Farm Progress

Land Values: An annual survey of Illinois farm managers shows land won’t change hands due to cash rents. There are too many other farmer-operators waiting who will quickly fill the void.

March 6, 2017

3 Min Read
young crop in field

By Ray Brownfield

While farmland values settled slightly lower again in 2016, there is anticipation that future corrections will be minor in scope. And rents? Don’t expect a lot of change going into 2018.

These are nutshell summaries of the 2017 Illinois Land Values and Lease Trends Report released by the Illinois Society of Professional Farm Managers and Rural Appraisers. The report is based on actual sales activity across Illinois during 2016, along with comments from members regarding trends and other factors impacting the industry.

Here are survey highlights:

• The price paid for excellent-quality farmland was estimated at $11,600 per acre on Jan. 1, 2016, and $11,000 per acre on Dec. 31, a decrease of 5% during the year. The same range of decline was seen for good- and fair-quality lands. However, prices paid for average farmland dropped 12%, from about $8,200 per acre to $7,200 per acre.

• Of the ISPFMRA members responding, 76 % expect farmland values to continue decreasing but not at a rapid pace. The majority predict land price declines of between 0% and 5% for 2017. Very few members anticipate serious price declines. The primary reasons for the continued drop are a further contraction of the ag economy, in general. No one expects a full-scale ag recession. In fact, a third of ISPFMRA members are expecting an expansion of the ag economy, which could hold prices steady or stimulate some increases.

• More than eight in 10 respondents expect increases in interest rates, as the Federal Reserve has already announced will likely happen in the year. This could have a dampening effect on prices paid for farmland as investors find other places to put their money. The Dow Jones Industrial Averages has been setting record highs lately, and that has taken a number of investors out of the farmland market, reducing competition and dampening sales prices.

What could force land prices to drop more than 5%? Plain and simple: lower commodity prices, followed by rising interest rates. Member surveys show elimination of ethanol mandates also ranks high as a possibility, while exactly half expect a slowing Chinese economy and good yields in South America will force land prices downward.

Overall, 90% indicated farmland owners are not considering selling at this time.

What about rents?
The trend in declining farm incomes that started in 2013 continued through 2016, and will likely stay the course, with decreased rents paid in 2017. While there is a great deal of variability in cash rents for a given land productivity, cash rents across all farmland classes fell: down $25 per acre for excellent-quality land, $23 per acre for good quality, $22 per acre for average quality, and $15 per acre for fair-quality farmland. This is expected to continue into 2018.

Despite lower rent payments, few expect farmland operations to change hands because tenants are unwilling to pay the cash rents being offered by landowners. According to those responding to the survey, there are too many other farmer-operators waiting who will quickly fill the void. Over half indicated 2016 rents were renegotiated, and more than seven in 10 said they have no operators unwilling to pay reduced cash rent levels.

The complete 100-plus-page 2017 Illinois Land Values and Lease Trends Report is available for order at

Brownfield is a farm manager and owner of Land Pro LLC, Oswego. He is a member of the Illinois Society of Professional Farm Managers and Rural Appraisers, whose members regularly contribute to this column. Have a farm management question or topic you’d like addressed? Email Carroll Merry at [email protected].


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