Little change in farmland values
“Not much has changed” was the basic message regarding prices paid for Illinois farmland presented during this week’s Farmland Values Conference.
The annual event is sponsored by the Illinois Society of Professional Farm Managers and Rural Appraisers.
“Statewide data suggests we witnessed mild increases in values for excellent, good, and fair soil types. A stable, yet slightly decreased, value was experienced amongst average soil types,” said Luke Worrell, AFM, ALC, Worrell Land Services, Jacksonville, IL, overall chair of the Farmland Values Survey and Conference.
“The largest increase was in ‘Class A’ farms, as high-quality farmland continues to carry the flag across the state,” he continued. “Findings suggest that the table has been set for what should be an exciting 2021 in Illinois’ agricultural economy.”
Worrell then cited three economic occurrences that played a role in the state of agriculture today.
COVID-19 – He noted that the bulk of land sales traditionally take place from October through March. “The virus and its impacts hit right when the market typically slows on volume of transactions anyway. By the time late September and October rolled around, commodity prices were on the rise and we had somewhat acclimated to our pandemic surroundings.”
Low Interest Rates – Worrell noted that interest rates continued to be incredibly low, allowing borrowers to be more aggressive than they normally would in acquisitions. This dynamic continues to be extremely supportive to land values.
Government Policy – “An enormous amount of money was paid out through various government programs in 2020. By the time commodities showed strength late in 2020, many operations had already been substantially buoyed by lingering MFP payments that came in during the first quarter, in addition to CFAP and CFAP2 payments,” he added. “The recent transition to the Biden administration will be closely observed as it deals with tariffs, trade and other issues that need clarity. It is a global economy in which the development and/or resolution of issues in Asia, Europe, Africa and South America affects all of us here in Illinois.”
Average sales prices of completed sales across the state remained stable. Excellent category land averaged $10,870 per acre in 2020 compared to $10,435 in 2019. Good category land was $8,446 compared to $8,335 in 2019. Average was $6,409 ($6,502); Fair was $5,353 ($5,090); Recreation land was $3,689 ($3,904).
“These are statewide averages,” he stressed. “One would need to look through the entire Report to see the region-by-region statistics.”