BLOOMINGTON, Ill. — “The composition of buyers and sellers and reasons for selling evolves slowly with minor changes from prior years despite widespread popular press stories about major structural changes in agriculture.”
That was the findings of the Illinois Society of Professional Farm Managers and Rural Appraisers’ outlook of price expectations and farmland transaction trends as part of the annual farmland value survey. The results were released in a March 19 webinar.
“This information is compiled by our members throughout Illinois to provide a comprehensive look at farmland values and lease trends through the eyes of the professionals who see it firsthand,” Seth Baker, ISPFMRA president and president and managing broker of Field Level Agriculture, Mt. Zion, wrote to open the survey report.
“Most of our members are also farmland brokers and many are farmland owners, as well. No group is better suited to provide the most accurate farmland value information available.”
Here are the findings of the farmland transaction trends that were part of the ISPFMRA’s land values survey.
Sellers Of Farmland
Estate sales accounted for 52% of the sales and were, by far, the largest category of sellers. Estate sales were followed by farmers who made up 23% of sellers.
Fourteen percent of those farmers were retired and 9% were active farmers. Individual investors accounted for 14% of the sellers, followed by institutions at 9%.
Reasons For Selling
The major reason for selling farmland was to settle estates, accounting for 58% of the farmland sales. “Invest in non-agricultural assets” was the next highest reason with 15% of the sales.
Remaining reasons were to re-invest pay down debt (11%), use for other personal purposes (11%) and re-invest in other agricultural enterprises (5%).
Methods Of Selling
The survey found 51% of parcels were sold by private treaty, 33% by public auction, 10% by multi-parcel auction and 6% by sealed bid.
Farmers accounted for 60% of the purchasers, with 59% being local farmers and 1% being relocating farmers. Individual investors who would not farm the land were the next largest group, accounting for 35% of the buyers.
Local investors accounted for 19% of the buyers and non-local investors were 10%. Institutions accounted for 5% of buyers.
Survey respondents indicated that 62% of farmland buyers did not require debt financing. On average, 61% of the purchase price was financed for those buyers requiring debt financing.
Respondents indicated that there was an increase in volume of sales during the last half of 2019 compared to the last half of 2018 with 29% indicating some increase.
Thirty-five percent of respondents indicated that volume decreased, and 38% indicated that there was no change in volume.
The survey found 39% of respondents expect farmland prices to decrease during 2020, down from 61% at the beginning of 2019. Forty-eight percent expect farmland prices to remain and the same, and 13% expect farmland prices to increase.
Overall, respondents are more optimistic at the beginning of 2020 as compared to the beginning of 2019.
Respondents were asked whether they expected the agricultural economy to expand or contract.
Seventy-three percent of respondents expected the economy to contract modestly while 27% expect the economy to expand. A contracting agricultural economy would be expected to have a negative impact on farmland prices.
Fewer respondents expected the agricultural economy to contract this year as compared to last year.
Respondents were asked at what level they expected corn prices to average in 2020.
Fourteen percent expect corn prices between $3 and $3.50 per bushel; 78% expect corn prices between $3.50 and $4 per bushel; and 8% expect corn prices between $4 and $4.50.