Cropland values

NORMAL, Ill. — It is too soon to tell exactly what direction 2018 farmland prices in the Land of Lincoln will take — a slight decline, stabilization or, like Iowa, a slight increase.

The last quarter in Illinois does seem fairly positive for land prices, said Bruce Sherrick, director of the TIAA-CREF Center for Farmland Research at the University of Illinois.

The Iowa State University land values survey, released Dec. 12, reported a 2 percent increase in 2017 after three consecutive years of farmland values slipping. So far in Illinois, the limited sales in recent months have demonstrated fairly strong prices, Sherrick said Dec. 13.

“It feels like there are light sales but the values are strong,” he said.

There seems to be a feeling that prices have hit bottom and are starting to stabilize. Positive factors may indicate an end of the trend in Illinois that has seen farmland prices fall almost 5 percent annually in recent years.

“Investor interest is certainly coming back into the market,” Sherrick said. “My expectation is that the fourth quarter will be fairly strong.”

The University of Illinois agriculture and economics professor works with the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA) putting together their annual Illinois Farmland Values and Lease Trends publication.

He said the reports from the 10 regions of the state are being gathered now, so precise 2017 data can be compiled and summarized for the 2018 report, to be released in early March. Early indications are that land prices will slightly strengthen or stabilize, Sherrick said.

“I am excited to see the survey,” he said.

There is some uncertainty. A lot of auctions this year didn’t get the reserve price and failed to sell land. But some of the sellers may have met later with top bidders and gotten a price they accepted. It is hard to know those details until the reports are assembled for the annual survey, he said.

The annual ISPFMRA reports for 2014, 2015 and 2016 showed an average decline in farmland prices of 4.6 percent. The 2017 report showed excellent farmland was valued at $11,000 an acre in December 2016, down 5 percent from the beginning of the year. The average price for good farmland was $9,500 one year ago.

“Late 2017 sales are more variable, but some are very strong,” Sherrick said.

Farmland values in other areas of the country are mixed, but there are some strong regions including the Pacific Northwest.

“Much of Iowa has bounced back,” he said.

Farmers remain the prominent buyers of farmland, Sherrick said. Farmland will continue to have value as new technology and data access boost productivity increases.

“The long-term world demand is still pretty positive,” he said. “Prices have been holding up better than some expected.”

Phyllis Coulter is Northern Illinois field editor, writing for Illinois Farmer Today, Iowa Farmer Today and Missouri Farmer Today.