DECATUR, Ill. — Illinois farmland values increased 20% in the first half of 2021, marking only the fourth time there has been this size of positive change in values since 1970.
The mid-year survey was conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers and results released Sept. 1 at the Farm Progress Show.
According to Gary Schnitkey, University of Illinois Extension farm management specialist, and Luke Worrell, Worrell Land Services, Jacksonville, the price increases occurred across the entire state and affected land from all productivity levels.
The survey was conducted in mid-August among ISPFMRA members and others associated with farmland sales and valuations.
The survey also asked respondents their farmland price expectations for the second half of 2021 with 33% expecting increases of more than 3%, 45% expect farmland prices to increase between zero and 3% and 22% expect prices to remain the same.
Just over half of those surveyed expect interest rates to be stable and 26% anticipate a 0.5% increase in the second half of 2021.
Most farm managers expect cash rents to increase in 2022 over the year’s level. The average increase across land classes is 11%, according to the survey.
Society members were asked what their expectations were for commodity prices and farmland values.
• The average selling prices of the 2022 crop across all responses were $4.86 per bushel for corn and $12.52 for soybeans. If realized, these prices would be higher than the 2014 to 2019 averages, but likely below selling prices for the 2021 crop.
• While ISPFMRA members expected farmland prices to be higher than they currently are, they do not expect rapid increases in farmland prices, with 51% believing that farmland prices will be 1% to 10% higher. Twenty-four percent believe farmland prices will be lower in five years compared to today.
• Most respondents expect cash rents to be modestly higher in five years than they are now, with 51% believing that cash rents to be 1% to 10% higher.
• Those surveyed anticipate average prices over the next five years to be $4.52 per bushel for corn and $11.58 per bushel for soybeans. The averages are higher than from 2014 to 2019.
• Most members expect inflation over the next five years, with 29% expecting inflation to pose a problem and 57% anticipate that moderate or low amounts of inflation will occur.
• Fifty-seven percent of society members expect interest rates to increase by less than 2% over the next five years and 41% expect rates to increase 2% to 5% over that same time frame.
Respondents indicated 37% are cash rent leases, 22% share rent, 19% variable cash rent, 16% modified share rent and 6% custom.
Shifts in rental agreements occur slowly over time, and many farm managers expect a shift to more variable cash rental arrangements.
Thirty-one percent of farm managers indicated that they had more interest in converting farmland to organic farming.
The mid-year survey is an abbreviated version of the more comprehensive Farmland Values and Lease Trends report that is prepared annual by the ISPFMRA. The 2022 survey will be done in January 2022 with the results released at the organization’s annual Illinois Land Values Conference on March 17 in Bloomington.