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Buoyed by a myriad of factors, from ethanol production to tightened supplies, farmland in Illinois continues its value climb, according to a recent statewide survey of land values.
A survey group comprising members of agribusiness and leaders of the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) recently released the findings of What's Driving Farmland Values? an analysis of current land values and their contributing factors.
Statewide, the survey shows prime farmland sold during 2006 ranged from $3,600 to $10,625 per acre, the latter price tag found on an 80-acre field with a productivity index of 141 in DeKalb County sold in September 2006.
Good quality land, according to the survey results, fetched anywhere from $3,450 per acre in Moultrie County to $5,952 per acre in Madison County sold in February and January of last year, respectively. Recreational land in Illinois sold for between $1,825 to $3,476 per acre in 2006.
Land values were up in all 10 crop reporting regions in the in 2006, with the sharpest climb coming in Region 2 in northwestern Illinois, where some farmland increased in value by 25%. In addition, University of Illinois Extension farm management specialist Gary Schnitkey, who chaired the survey group, notes land in close proximity to an ethanol plant in Region 2 fetched a premium of $250 to $500 per acre.
While some 2006 land value jumps are without precedent, Schnitkey says the overall increase did slow from the previous year. But, more farmers -- buoyed by high commodity prices -- are entering the market to buy land. This trend is changing the marketplace and will continue to do so through 2007.
"Farmers have excess funds and a positive outlook. They have begun purchasing farmland in earnest," Schnitkey says. "Weaker demand for farmland caused a soft ending to 2006. A very strong demand is emerging in the first quarter 2007, changing a land glut into a scarcity."
Other drivers of the increase in farmland values, according to the ISPFMRA survey, are:
- 1031 tax-free exchanges
- Premiums for larger, high-quality land tracts
- Production technology
- Alternate competing investments, including stocks and bonds
- Absentee ownership
- Inflation threat
- Auction sales
- Worldwide commodity cycle
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