I don’t know of a topic closer to a farmer’s heart than the price of farmland. For farmers, the land they farm represents their livelihood, their retirement and their legacy.
Every spring, the Illinois Society of Professional Farm Managers meet and hold the Illinois Land Value Conference. It was held recently in Bloomington.
Just as a bit of background, I can remember my father (now 89 and retired) purchasing land in the late 1970s for $3,000 an acre and thinking that land would never go higher. Now, $3,000 an acre would be a steal.
Earlier this month, Illinois land sales reported by auctioneers ranged from $12,100 per acre for a 236 acre farm near Charleston in Coles County to $16,200 per acre for a 219 acre farm south of Aledo in Mercer County.
Farm managers attending the land value conference expect farmland prices to level or even drop by 20 percent in the next few years, partially due to lower grain prices.
“Simply put, farmland earnings are important and have been the driver on prices paid for farmland over the past few years,” said Dale Aupperle of Heartland Ag Group in Forsyth, IL, president of the Illinois Society of Professional Farm Managers, in a press release. “Sharply lower grain prices have diminished earnings projections and put the brakes on the uptrend in farmland values.”
Corn prices are currently around $4.30 per bushel. From 2010 to the summer of 2013, corn prices were consistently above $5 per bushel.
Others are a bit more optimistic that farmland will once again weather the price storm.
Brent Gloy, director of Purdue’s Center for Commercial Agriculture, told the land value conference that he’s cautiously optimistic about Midwestern farmland prices.
“The past seven years in agriculture have been spectacular,” said Gloy, adding the real rate of increase in farmland prices the past decade have been higher than those in the 1970s.
In Illinois, farmland values between 1971-81 had an annual growth rate of 7%. Between 2003 and 2013, Illinois farmland values have risen at an annual rate of 9.8%.
He thinks biofuels played a big role in the increase in land prices the past few years. There continue to be attempts to lower the Renewable Fuel Standard, which could also affect what farmland prices do. The key, he said, is to be a good manager.
The farm manager’s group annually categorizes land values. Here’s this year’s evaluation: Excellent land was down 2 percent; Good land was down 3 percent; Average land was down 4 percent; and Fair land was down 7 percent.
The group said local farmers are still the primary buyers of farmland with estate sales leading the way in reasons for selling as well as bringing properties to the market. Public auctions (43 percent) led the list of methods of selling followed by private treaty (36 percent), sealed bid (11 percent) and multi-parcel auction (10 percent).
