Illinois farmland prices increase

By Melissa Silverberg

The value of Illinois farmland increased 15.5 percent in the past year, according to a study released by the University Extension Program.

The study is based on numbers from the U.S. Department of Agriculture’s yearly surveys of farms nationwide, said Dale Lattz, a farm management specialist in ACES.

According to the study, the price per acre of Illinois farmland rose from $4,330 in 2007 to $5,000 in 2008. The high rise in prices made 2008 the fourth consecutive year with an increase of more than 10 percent. The 2008 increase is also the second highest on record since 1977.

“It is really a reflection of the increase in commodity prices, like corn and soybean, that has been going on since fall 2006,” Lattz said.

Farm prices have now increased every year for the past 21 years with the last drop in prices coming in 1986-87. Also, since the year 2000, Illinois farm real estate values have increased 121 percent, according to the study.

There are several other causes for the increase, Lattz explained. Included in these reasons could be the development of foreign countries such as India and China, which are now increasing their demand for food as a result of increase in population and economic growth.

Lattz also said the weakening value of the U.S. dollar in recent months may have had an impact on land prices.

The increase in farmland prices is not unique to Illinois, but common among neighboring states such as Indiana and Iowa.

“Generally all the Midwestern states move in the same direction,” Lattz said. “They have the same factors affecting them.”

Another possible reason for the increase in the value of Illinois farmland is a greater demand for land, which can partly be attributed to other uses, such as producing ethanol, said Lattz.

“There’s not a land shortage, but there is more land being sold as development land, not necessarily farmland,” said Bradley Uken, manager for the Champaign County Farm Bureau. “That creates a higher demand for land.”

Although the price of farmland has increased, Uken said the profits and expenses for farmers “balance out” as commodity and input prices have also increased.

“I think it has really caused local farmers to take a look at the purchasing opportunities that are out there, and they may rethink purchasing new ground right now,” Uken said.

The higher prices will affect farmers differently based on their situation. It may be more harmful for younger farmers or those with limited resources who are trying to purchase land, Lattz said.

“It takes more money to buy the land now, which can be difficult for those with less financial capabilities,” he said.

However, for farmers who already own land or are looking to sell, Lattz said the increase will help their bottom line.

“You would always rather have the prices go up by that much than down by that much,” Lattz said.