According to a new study released during the Farm Progress Show last week, prices being paid for farmland across Illinois are continuing a softening trend following prices being paid for commodities with decreases between 2-7 percent. The “Snapshot Survey” is commissioned each year by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) and conducted by Gary Schnitkey, Ph.D. with the University of Illinois College of ACES.
“Land values are continuing a general softening across the state with the exception of some regional areas where there has been very little land for sale,” said David Klein, AFM, ALC, vice president of Soy Capital Ag Services, Bloomington, IL and co-chair of the annual ISPFMRA Land Values Survey and Conference. “Decreases in farmland returns for 2015 and 2016 are seen as the main reason for the lower values. USDA projected income for 2015 is expected to be the lowest since 2010 and our survey respondents are telling us they expect the softness in land values to continue,” added Klein who expects that the price paid for a bushel of corn will be below $4 into 2016.
“Cash rents in 2016 are expected to be about $30 per acre lower than 2015 cash rents,” Schnitkey reported during the press conference. He cited 2016 rents for Excellent farmland to be in the range of $316 compared to current values of $350; $267 in 2016 for Good land compared with $295 for this year; $219 next year for Average land compared with $250 in 2015, and; $177 for Fair land in 2016 compared with this year’s $200 rent per acre.
However, Klein is optimistic for the future because Illinois farmland is among the most productive in the world.
Additional key points include:
- During the first half of 2015, farmland prices decreased. Results suggest decreases between 2.5 percent and 7.3 percent, depending on quality of farmland.
- Most respondents expect decreasing farmland prices in the second half of 2015. Decrease in 2015 returns and continued low returns in 2016 are the primary cause for farmland price decreases.
To learn more, listen to ISPFRMA press conference: ISPFRMA Land Values Press Conference