By TIM ALEXANDER

Illinois Correspondent

DECATUR, Ill. — The Illinois Society of Professional Farm Managers and Rural Appraisers’ (ISPFMRA) mid-year snapshot of farmland values reveals a “static” price landscape based on recent sales activities around the state.

The results of the Society’s survey were released at the 2019 Farm Progress Show in Decatur, where a news conference was held on opening day, August 27.

“We have seen a minute drop of 1 percent in the value of excellent productivity farmland to $10,497 per acre in the first half of the year,” reported David Klein, chair of the ISPFMRA land values and lease trends project and vice president of Midwest Ag Services in Bloomington.

“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 decrease in value to $4,898 per acre.”

Klein added that land prices are expected to either stay the same or decrease by less than 3 percent during the remainder of 2019, according to the results of the ISPFMRA survey. “A driver on sales prices is the land that is available and there has not been a great deal of that out there. It has been tight.”

Two trends have been prevalent in its mid-year snapshots over the past few years: types of sales (63 percent are estates) and the buyers (64 percent are farmers). With little changing there, it will take other, external factors to increase Illinois farmland values, Klein explained.

“Factors that could impact prices in a positive way are the obvious ones,” he explained, “those being 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 (the North American Free Trade Agreement replacement) by Congress, and the recent agreement by Japan to buy large amounts of U.S.-produced corn.”

Farm real estate values haven’t changed much over the past five years – and not at all in the past year – despite the continued erosion of farm commodity prices and farm income, according to the National Agricultural Statistics Service (NASS) of the USDA.

The 2017 Census of Agriculture was recently finalized with revisions made to farm real estate value data from 2014-18, bringing the 2019 average farm real estate value for Illinois, at $7,280 per acre for all classifications, in line with NASS’ revised 2018 estimate.

Its 2018 farm real estate value estimate was adjusted downward by 2.3 percent, the top range in a five-year average downward adjustment of 1.4 percent.

“This is the second year in a row without a decrease as experienced in the prior three (2015-17) years,” observed Brad Zwilling, University of Illinois farm economist, in an August 16 paper published by its College of Agricultural, Consumer, and Environmental Sciences and Illinois FBFM.

“Even with no change in the average farm real estate value in 2019, the average farm real estate value for 2019 was 54 percent higher than the 2010 value of $4,720.”

During the “ethanol boom” of 2005-09, the change in average Illinois farm real estate values ranged from minus-2.2 percent to plus-25.4 percent, according to Illinois FBFM and the U of I.

As for 2019 cash rent trends, they are tracking along with prices currently being paid for land – in other words, they too are static, according to Illinois farm economist Gary Schnitkey. He noted rental rates for excellent quality Illinois land averaged $302 per acre for 2019 and are expected to be set at $298 for 2020.

Good-productivity farmland is at $261 per acre and expected to fade slightly to $254 next year. Average-quality land is valued at $212 per acre for and is expected to drop to $205 per acre, while fair-quality land will adjust from $170 per acre to $167.

Mirroring the ISPFMRA land values report for 2019, Schnitkey says factors that could increase rental rate values include higher corn prices and resolution of any number of trade issues impeding U.S. ag commodity exports.

Of interest to landowners considering 2020 lease rates and terms: 84 percent of respondents to the ISPFMRA mid-year survey indicated they are satisfied with the performance of variable cash leases and say this type of arrangement makes negotiations easier compared to fixed-rate agreements.

However, just 15 percent reported that they experience yearly or every-other-year rate adjustments, while 59 percent report “periodic” changes and 26 percent report adjustments are “seldom” made to their variable cash rent lease terms.