Largely impacted by softening grain prices, Illinois farmland values are trending lower, industry specialists said Thursday during the Illinois Land Values Conference in Bloomington.
"Simply put, farmland earnings are important and have been the driver on prices paid for farmland over the past few years," says Dale Aupperle, chairman of the Illinois Society of Professional Farm Managers and Rural Appraisers. ISPFMRA hosted the conference.
"Sharply lower grain prices have diminished earnings projections and put the brakes on the uptrend in farmland values," he says.
Related: Experts Cautiously Optimistic About Illinois Land Values
Joining Aupperle in Thursday's presentation was Gary Schnitkey, Ph.D., economist with the University of Illinois. He notes that crop insurance provided farmers with a substantial amount of cash in 2012 and 2013, but those funds are no longer coming in.
"Experts are forecasting farmland returns to drop by up to 20%," he advises.
Aupperle explained that though the trendline on farmland values has been upward for decades and has seen significant interruptions in the pattern three times, this time is a little different.
"It doesn't look like a bubble to us," he says. "A more normal time for farmland prices may be in store for the next several years. Commodity prices have led to this situation."
Lease trends report
Aupperle and Schnitkey cited the 2014 Illinois Land Values and Lease Trends Report during their presentation at the conference. This is a composite of reports from around the state on land sales and lease trends occurring in Illinois during 2013.