BLOOMINGTON, Ill. — Farmers continue to account for a majority of farmland buyers and the agricultural economy will carry over to increased land prices, according to a survey by the Illinois Society of Professional Farm Managers and Rural Appraisers.
Details of the survey of society members were presented by Gary Schnitkey, University of Illinois agricultural economist and farm management specialist, at the ISPFMRA annual Land Values Conference.
Here are the findings of the farmland transaction trends that were part of the ISPFMRA’s land values survey.
Buyers Of Farmland
Local farmers represent 55% of the buyers, and 3% are farmers relocating to a new area.
Other buyers were local investors investing in farmland, 16%; non-local investors, 12%; institutions, 7%; and individuals purchasing farmland for recreational purposes, 7%.
Survey respondents indicated that 63% of farmland buyers in Illinois did not require debt financing. On average, 61% of the purchase price was financed for those buyers requiring debt financing.
Sellers Of Farmland
Estate sales accounted for 55% of the sales and were, by far, the largest category of sellers. Estate sales were followed by farmers who made up 24% of sellers, 14% of whom were retired and 10% were active. Individual investors accounted for 11% of the sellers, followed by institutions at 10%.
Reasons For Selling
The major reason for selling farmland in Illinois was to settle estates, accounting for 55% of the farmland sales. Other reasons were use for other personal purposes, 13%; pay down debt, 12%; invest in non-agricultural assets, 10%; and reinvest in other agricultural enterprises, 9%.
Methods Of Selling
The survey found 47% of the parcels were sold by private treaty, 32% by public action, 11% by multi-parcel auction and 10% by sealed bid.
Respondents indicated that there was a decreasing volume of sales during the last half of 2020 compared to the last half of 2019. Thirty-six percent indicated some decrease while 14% indicated substantial decrease.
Forty-eight percent of respondents expect Illinois farmland prices to increase between 5% and 10% in 2021, 35% expect prices to increase by 1% to 5%, 9% said prices would be unchanged, 4% expect an increase of over 10%, and 4% expect a decrease of 1% to 5%.
Respondents were asked whether they expected the agricultural economy to expand or contract. Twenty percent of respondents expected the economy to expand robustly while 68% expect modest expansion. Only 12% of respondents expect the agricultural economy to contract.
The survey also asked what level respondents expected corn prices to average in 2021. Twenty-eight percent expected corn prices to be over $4.50; 64% expect prices between $4 and $4.50; and 8% anticipate prices between $3.50 and $4 per bushel.