A sagging economy hasn’t affected land prices, at least not in Illinois. Farmland prices actually rose slightly during the first half of 2010, according to a survey of the Illinois Society of Professional Farm Managers and Rural Appraisers.
The best land increased 1.7% to $7,665/acre. This land considered excellent averages a yield of at least 190 bu. of corn/acre. Good land that yields 170-190 bu./acre sold for an average of $6,639. Average quality land (150-170 bu./acre) sold for $5,724/acre and fair quality land (150 bu./acre and less) sold for $4,646/acre.
However, strong land prices are not attracting a lot of sellers. The group of appraisers and farm managers reported light volume of land sales during the first six months and they expect about the same volume for the remainder of the year. The buyers continue to be dominated by operating farmers. While outside investors are buying some land, farmers are still the most active investors.
The group also expects land prices to continue increasing next year. Most of those surveyed anticipate price increases up to 5%.
Cash rents higher
The appraisers and farm managers also reported cash rent trends. For 2011, they expect slightly higher rents for all types of land. Cash rent for excellent land should average $279/acre, $237/acre for good land, $199/acre for average land, and $162/acre for fair quality land.
A wide variety of rental agreements are now used and no particular lease or rent is considered standard. In fact, variable cash rent arrangements are becoming more popular. The most popular variable cash rent includes minimum cash rent with chance of bonus. Another popular agreement ties cash rents to production only.