“Static” is likely the best way to describe what is happening with prices being paid for Illinois farmland.
This is according to the annual Mid-Year Snapshot Survey done by the Illinois Society of Professional Farm Managers and Rural Appraisers among its members and those closely allied to the industry.
“We have seen a minute drop of one percent in the value of Excellent Productivity farmland to $10,497 per acre in the first half of the year,” said David Klein, AFM, ALC, vice president of First Mid Ag Services, Bloomington, and overall chair of the Society’s Land Values and Lease Trends project.
“There was no change in the price of Good Productivity farmland and it is holding at $8,240. Average Productivity land is stable at $6,081 and Fair Productivity land saw a 4.6 percent decrease in value to $4,898 per acre,” said Klein.
The Productivity Indexes are based on Bulletin 811 standards where Excellent Quality farmland averages over 190 bushels of corn per acre with a soil productivity index of 133 or higher, Good Quality farmland averages between 170 and 190 bushels per acre with a soil productivity index of 117-132, Average Quality farmland averages between 150 and 170 bushels per acre with a soil productivity index of 100-116 and no irrigation, and Fair Quality farmland averages below 150 bushels per acre with a soil productivity index under 100.
“The expectations are that land prices are either going to stay the same or decrease by less than three percent over the next six months,” Klein reported.
“Factors that could impact prices in a positive way are increases in commodity prices, any changes in interest rates, domestic biofuel policy and the successful negotiation and implementation of new trade agreements with other countries. We’re all closely watching what happens with the trade situation with China, the need for passage of the USMCA agreement by Congress and the recent agreement by Japan to buy large amounts of U.S.-produced corn,” said Klein.
Impact of Prevent Plant Program
The survey indicates that 31 percent of the farm managers reported some USDA Prevent Plant Program participation on the farms they manage. Of those that experienced prevented planting on managed acres, 15 percent of the corn acres and five percent of the soybean acres were Prevent Plant.
The major reasons for taking Prevent Plant were that the farmland was never fit to plant and Prevent Plant had higher expected returns than planting.
Lowering of the farm’s crop insurance Annual Production History yield was indicated as important in 35 percent of the cases.
Cash rent trends similar
Cash rents for 2019 and 2020 are tracking along with the prices being paid for land in that there is little expected in terms of changes,” says Gary Schnitkey, Ph.D., University of Illinois Department of Ag and Consumer Economics.
Schnitkey notes that rental rates for Excellent Quality land averaged at $302 per acre for 2019 and is expected to be set at $298 per acre for 2020. Good productivity land is at $261 and is expected to fade very slightly to $254. Average Quality land is at $212 and is expected to drop to $205 and Fair Quality land will adjust from $170 per acre to $167.
He says the factors that could impact rental rates positively will be higher corn prices – respondents expect 2019 prices to average $4.05 per bushel – which could come about with the possibility of trade resolutions with China.
Negative factors will be higher production costs for 2020 as well as yields and soybean prices, also impacted by China’s demand for product with their outbreak of African Swine Fever.