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Prices paid for farmland 'unprecedented'

The entrance to Thursday's Land Values Conference in Bloomington.

“Unprecedented” describes the land market throughout 2021 and into the early stages of 2022.

“We ended 2021 incredibly strong with lots of action and we sit here in early 2022 trying to decipher where the wild ride will end,” said Luke Worrell, AFM, ALC, Worrell Land Services and chair of the Land Values Conference held in Bloomington Thursday.

The annual event was sponsored by the Illinois Society of Professional Farm Managers and Rural Appraisers.

Citing increases being paid for farmland as high as 26 percent compared to a year ago, Worrell says, “Across the state we have seen meteoric rises in prices across all classifications of land. Leading the charge was Class A or ‘Excellent’ acreage which saw a jump of 26 percent. It is a number that can take your breath away, but across the entire state the regions with Class A farmland experienced a rise of 30 percent from two years ago.”

Worrell notes that the dramatic increases didn’t end with Class A acreage.

“Lower land category classifications like Good were up 24 percent. Average farmland was up over 20 percent. Even Fair land was up 5 percent and recreational or mixed-use properties elevated significantly throughout certain pockets of the state.”

Worrell noted that many growers were able to sell their 2021 grain nearly 50 percent higher than they did with their 2020 grain. Additionally, interest rates are still historically low. Borrowing strength is strong and there are many cash buyers out there as well. Historically speaking, land can be very bullish in unsettling turbulent times as many see it as a hedge on inflation.

Cash rents are also on the rise according to Gary Schnitkey, Ph.D., University of Illinois, who shared the podium with Worrell.

“The mid-year survey we did last August projected an average rise in rent fees of 12 percent, but our year-end numbers show that a figure closer to 20 percent is what ended up happening more frequently than not,” Schnitkey said.

He explained that Per Acre Cash Rents for 2022 for Excellent farmland ranges from $400 at the top end to $300 in the lower 1/3. Those same ranges for Good land vary from $360 at the top to $250 at the lower 1/3. Average farmland varies from $300 at the top to $215 at the bottom. Fair land ranges from $250 per acre to $160.

“There are two types of cash rent leases: traditional and variable,” Schnitkey explains. “Under a traditional lease, a fixed amount of cash rent is negotiated between the land owner and tenant, typically at the beginning of the crop year. Under a variable lease, the amount of the cash payment depends on revenue. A typical variable lease has a fixed base payment and then a “bonus” payment.”

The bonus payment is a percentage of gross revenue when gross revenueexceeds a specified level. In 2022, traditional crop share arrangements will account for 28 percent of leases while variable cash leases had a 36 percent share of leases.

“Farm managers typically use short lease terms on cash rental arrangements. Of cash rents, 81 percent of the leases were one-year in length,” he notes.

The complete 124-page 2022 Farmland Values and Lease trends Report is available for purchase at $15 per copy at The summary presentation made at the conference is also there for open viewing.


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