Experts Cautiously Optimistic About Illinois Land Values

ISPFM members see some potential for a softening in land values. At mid-year, excellent land is averaging $13,200.

Published on: Sep 2, 2013

Hickory Point Ag's Bruce Huber is approaching this land market with "cautious optimism."

During the Farm Progress Show, Huber, president of the Illinois Society of Professional Farm Managers, presented a mid-year snapshot of the Illinois land market, along with the University of Illinois' Gary Schnitkey and Heartland Ag Group's Dale Aupperle. Aupperle notes land has gained an unprecedented 65% in value over the past three years. Today, prime Illinois farm land is selling for an average of $13,200.

Still, there ISPFM members seem to expect a bit of softening in the land market. According to the mid-year survey, 45% of ISPFM members expect land prices to decrease. Yet, 46% expect values to increase 1%-5% over the next five years, while 9% expect values to remain unchanged.

Experts Cautiously Optimistic About Illinois Land Values
Experts Cautiously Optimistic About Illinois Land Values

Schnitkey presented the cash rent component of the survey. ISPFM members expect small decreases in cash rent for the 2014 crop season.

Cash rents averaged $388 an acre for excellent quality farm land. Schnitkey notes the survey indicated an expected drop to $374/acre for the coming year.

Lastly, respondents look for corn prices to fall to an average of $4.90 for the coming year. Over they next five years, they expect corn will average $4.75/bushel.

So, is a 1980s-type decline on the way? Only 17% of respondents think there's a 10%-50% chance that a 1980s-style decline is on the way.

Looking at economic drivers for farm land values, the survey indicates a stall in the Chinese economy or a loss of the Renewable Fuels Mandate would have the greatest chance of causing a significant downward trend in values.

Conversely, a 5% growth in the U.S. economy or a 10% increase in inflation would have a positive effect on land values. ISPFM members expect the Farm Bill will have no effect on land values.