Sharp rise in farmland sale prices

BLOOMINGTON, Ill. — “Unprecedented” may seem overused the past two years, but it is most fitting as a description of what happened to Illinois farmland sale prices in 2021.

“I don’t think we’ve seen, certainly in my career, a year like 2021 with that steep of an incline, and that much going on in the world that can affect us in agriculture,” said Luke Worrell, Illinois Society of Professional Farm Managers and Rural Appraisers Land Value Conference chair.

ISPFMRA’s comprehensive statewide survey, using data collected by over 80 professionals, reported the following averages, led by a 26% year-over-year increase in farmland rated excellent.

Excellent category farmland sales averaged statewide $14,700 per acre in 2021 compared to $10,870 in 2020.

Good category land was $10,710, up from $8,446 in 2020; average land was $7,455, up from $6,409 in 2020; fair was $5,500, up from $5,353 in 2020; and recreation land was $4,615 per acre, up from $3,689 in 2020.

“We finished 2021 as strong as we’ve ever been, and we’ve continued that strength through the first 10 weeks.”

—  Luke Worrell, chair, Illinois Society of Professional Farm Managers and Rural Appraisers Land Value Conference

Excellent-rated land has a productivity index of 133 and above; good-rated land’s PI is 117 to 132; average, 100 to 116; and fair, less than 100.

“These are averages across the state. So, this is a disclaimer here that I really encourage you, if you only work in Region 5, for example, a lot of this is great, but really peal back the layers on your regions because there’s a lot to be deciphered within regional breakdowns,” said Worrell of Worrell Land Services, Jacksonville.

“Averages can be dangerous, but it’s a great snapshot. Obviously we all know every farm is uniquely different. So, you can’t just take one slide and just assume it’s going to fit one farm.

“We finished 2021 as strong as we’ve ever been, and we’ve continued that strength through the first 10 weeks.”

Drivers

Worrell noted that many growers were able to sell their 2021 grain nearly 50% higher than they did with their 2020 grain.

“It stands to reason that when potential gross farm income can see that jump, values could rise. Additionally, interest rates are still historically low. Borrowing strength is strong and there are many cash buyers out there as well,” Worrell said.

“Historically speaking, land can be very bullish in unsettling turbulent times as many see it as a hedge on inflation. Also, the supply of readily available farms was down in 2020, meaning that pent-up demand loomed throughout 2021.”

One of the more interesting phenomena of 2021 was the sheer number of sales, particularly auctions that took place in the fall.

“We saw more Class A, excellent quality acres be put on the auction block than in recent memory. With those auctions came a wide variety of auction methods as that world changed thanks to COVID-19. While we still see a majority of local buyers, the presence of large institutional buyers and ‘mega-wealthy’ interest has increased over the last year,” Worrell added.

Cyclical

A similar farmland sale price surge occurred in 2010.

“The surge in 2021 obviously was a little bit steeper climb than 2010. That last surge lasted three years — 2010, 2011 and 2012. Perhaps that third year was propped up because of an awful drought. Commodity prices went sky-high, but things are cyclical,” Worrell said.

“We’re about a year and one-half into this surge. It’s hard to think that we won’t be back here next year talking about another increase throughout 2022. So, I think the really interesting thing would be what the table will look like heading into 2023. Nobody can predict what’s coming up, but I think we’re right in the middle of this up-tick right now.”

Around The State

Here are some of the survey findings in Illinois:

• Region 1 — Will, Kankakee, Kendall, Kane, DeKalb, Grundy, McHenry, Lake, DuPage, La Salle and Boone counties: Excellent quality farmland sales averaged $13,600 per acre, good land sales averaged $9,100 per acre, average farmland was $7,300 per acre and there was only limited data for fair productivity tracts and recreational tracts.

• Region 2 — Bureau, Carroll, Stephenson, Jo Daviess, Whiteside, Lee, Ogle, Winnebago, Bureau, Henry and Mercer counties: The average acre median sale price for excellent quality farmland was $13,000 per acre, good land sales had median price of $10,000 per acre, average farmland was $7,284 per acre, fair’s median was $4,923 per acre and recreational tracts $4,550.

• Region 3 — Stark, Peoria, Warren, Henderson, Schuyler, Adams, Hancock, Brown, Pike, McDonough, Knox and Fulton counties: The overall average sale price for excellent farmland was $13,429 per acre, good quality land averaged $9,420, average land was $6,469, the three sales of fair land in 2021 averaged $4,436 and recreational averaged $4,385. Demand for 20- and 40-acre tracts in Region 3 was at and all-time high in 2021 with new record sales set month after month.

• Region 4 — Livingston, Woodford, McLean, Tazewell, Mason, Marshall and Putnam counties: High productivity farmland sales averaged $15,265 per acre weighted, good rated land $11,982, average farmland $7,760, fair rated land sales were sparse and recreational ranged from $4,300 to $9,300.

• Region 5 — Champaign, Douglas, Coles, Edgar, Vermilion, Iroquois and Ford counties: Excellent farmland sales averaged $13,554 per acre weighted, good quality $10,173 average farmland $7,486, insufficient data for fair farmland sales and recreational averaged $5,246 per acre weighted.

• Region 6 — Macon, Logan, DeWitt, Piatt, Moultrie, Shelby and Christian counties: The sales for excellent rated farmland averaged $14,386 per acre weighted, good quality $10,658, average farmland $8,718, fair $8,027 and recreational $4,478 per acre.

• Region 7 — Greene, Calhoun, Sangamon, Macoupin, Morgan, Scott, Montgomery, Cass and Jersey counties: The average acre weighed sales for excellent quality farmland was $13,918, good productivity $10,560, average $7,087, fair $6,245 and recreational tracts $4,175 per acre.

• Region 8 — Madison, Bond, St. Clair, Clinton, Washington, Monroe and Randolph counties: Excellent quality per acre farmland sales averaged $15,714 acre weighted, good productivity was $11,473, average quality $10,284, fair $7,679 and recreational tracts averaged $3,530 per acre weighted.

• Region 9 — Clark, Cumberland, Lawrence, Wabash, Edwards, Fayette, Effingham, Richland, Marion, Jasper, Crawford, Wayne and Clay counties: There were no sales in the excellent productivity land in this region in 2021. Good productivity farmland sales per acre averaged $9,924 weighted, average productivity $7,786, fair $5,747 and recreational tracts averaged $3,515 per acre.

• Region 10 — Gallatin, Hamilton, Massac, Pulaski, Saline, White, Alexander, Franklin, Jackson, Jefferson, Williamson, Union, Johnson, Hardin, Perry and Pope counties: The sales of good quality farmland averaged $9,120 per acre weighted. The region is divided into two subdivisions of average productivity cropland. The sales of average quality farmland in Area 1 (105.1 average productivity index of sales) was $7,526 acre weighted and $6,146 per acre in Area 2 (107.1 PI average). The sales of fair productivity tracts averaged $4,621 and recreational tracts $2,885 per acre weighted.