1. Illinois Land Value and Land Rent Trends
Gary Schnitkey
University of Illinois

2. Topics Current farmland prices Current farm returns
Rent and price projections
Uncertainty in the future

3. Illinois Land Values and Cash Rents
2006: $3,640
2014: $7,700
2015: $7,650
2016: $7,450

4. Illinois Farmland Values
2017
Illinois Farmland Values
& Lease Trends
Understanding Our Farmland Categories
Using the Productivity Index from the University of Illinois (Bulletin 811).
Excellent Productivity –
147 to 133
Good Productivity –
132 to 117
Average Productivity –
116 to 100
Fair Productivity –
Less than 100
Recreational Tracts
Transitional Tracts

6. 2016 Excellent Quality Farmland
Mid Range
Land Value
Comments
Region 1
$10,500
Higher supply of land south of Illinois River led to more decrease there. Some new 1031 exchange money in the market supporting values.
Region 2
$11,500
Farmers still the main land buyers. Tight supply. 9 sales still over $12,000/acre.
Region 3
$11,000
Low volume with sellers resisting lower prices. Location has become much more important to high sales prices.
Region 4
$10,750
Wider range of prices than Bare, square, high percentage tillable bringing a premium. Low volume.
Region 5
$10,325
Prices down 5-8%. Same notes as Region 4 on volume and price for premium tracts. Especially strong in Champaign & Douglas Counties.
Region 6
$10,525
Down 8-9%. Larger disparity between low priced tracts and high priced sales (Over $4,100/ac). Location important.
Region 7
$12,200
This region sustained the high quality land values better than any other region. Evidenced by 888 ac. Auction -March ‘17
Region 8 --
Region 9
$10,250
Region 10
$10,880
(average)

7. 2016 Good Quality Farmland Region 1 $8,200 Region 2 $8,000 Region 3
Mid Range
Land Value
Comments
Region 1
$8,200
Prices down ~7%, most found in Will County area. Prices higher in the south and west side of this Region.
Region 2
$8,000
Median sales price down 11%. Mostly farmer buyers but investors were picking up opportunities. Wide price range.
Region 3
$8,250
Less liquidity than the highest quality farmland. Field shape & percent tillable really influenced price negatively.
Region 4
$8,750
Higher volume than Prices declined early and leveled out later.
Region 5
$7,950
Sought out by investors and farmers when “excellent” land seemed not available. Price down~11%. Volume -20%.
Region 6
$9,425
Better quality “good farms” sold in 2016 vs Longer marketing timeframe to move most tracts.
Region 7
$8,755
Several option or easement payments being “1031’ed” into farmland purchases by local landowners.
Region 8
$10,700
“The best soils” in this region. This average actually rose likely as compared to 2015.
Region 9
$8,800
Very similar price to 2015.
Region 10
Similar price average to 2015-or a little higher. Wide range in price per acre.

8. AgLetter Chicago FED, May 2017

9. Source: 2016 Farmland Value Survey Iowa State University, December 2016

11. Net Farm Incomes on Grain Farms

12. Why 2016 Income Higher? Good corn soybean yields
Relatively good soybean prices
Reductions in non-land costs
2015 ARC payments received in 2016
Inventory gain:
Corn: $3.60 end-of-year 2015 inventory price, $3.65 old crop price
Soybeans: $8.60 end-of-year 2015 inventory price, $9.40 old crop price

13. Financially What Is Happening
Strong financial farms at the end of 2012
Since 2012, many farms are eroding working capital
Grain inventories and prepaid expense down
Operating loan balances up
Most farm have strong equity and solvency
Some farms have difficulty showing positive cash flow

14. Components of Current Assets ($ per acre)

15. Operating Notes ($ per acre)

16. Debt-to-Asset Ratio

17. Market Year Average Prices and Forecasts
Period
75-05
06-13 14 15
16P
17P
Corn ($/bu.)
2.33
4.70
3.70
3.61
3.40
Soybeans ($/bu.)
5.95
10.91
10.10
8.95
9.55
9.30
Wheat ($/bu.)
3.25
6.25
5.99
4.89
3.90
4.25
Projection for 2016 and 2017 are WASDE projections,
Fall 2017 bids (east-central Illinois, June 2):
$3.65 corn
$8.96 soybeans
Long run projection have 94.5 million acre planted of corn in 2016, down to 90 in 2017

18. November 2017, CME Soybean Prices

19. 2016
15 billion production =
86.8 million x
174.4 bu/acre
2016
4.2 billion production =
83.0 million x
51.4 bu/acre

20. Monthly Corn Prices, U.S.

21. Gross Revenue, Corn, Central Illinois, High Productivity
2015
2016
2017
Crop revenue (200 bu. x $3.77)
$754
Crop revenue (228 bu. x $3.54)
$807
Crop revenue (200 bu. X $3.70)
$740
ARC 45 20 15
Crop insurance 31 5
Gross revenue
$830
$832
$6740
Yields up in 2016 but prices are lower

22. Corn, Revenue and Costs, Central Illinois, Low-Productivity

23. Gross Revenue, Soybeans, Central Illinois, High Productivity
2015
2016
2017
Crop revenue (66 bu. x $9.08)
$599
Crop revenue (69 bu. x $9.85)
$680
Crop revenue (61 bu. x $9.00)
$549
ARC 45 20 15
Crop insurance 7 4
Gross revenue
$651
$6704
$564
Yields and prices are higher in 2016

24. Soybeans, Revenue and Costs, Central Illinois – Low-Productivity

25. Central Illinois, High-Productivity, 2017

26. Operator and Land Return and Cash Rents, Central Illinois, High-Productivity Farmland
Average Cash Rent
ISPFMRA Cash Rent

27. Cash Rents, Illinois

28. Cash Rent by County, 2016
Released by USDA, September 9, 2016
2016 cash rents
Average cash rents for each county

29. Average Rents and Corn Yields, Illinois
Trend Corn
Yield
Average
Cash Rent
140
$167
160
$178
180
$230
200
$281

30. Average and Professionally Managed Farmland, Illinois

31. 2018 Operator and Land Returns Estimates

32. 10-year Treasury Note Yields
Nov 7, 2016: 1.83%
Dec 1, 2016: 2.45%

33. Land Values Price have risen because of Increasing returns
Lower interest rate
𝐂𝐚𝐩𝐢𝐭𝐚𝐥𝐢𝐳𝐞𝐝 𝐕𝐚𝐥𝐮𝐞= 𝐂𝐚𝐬𝐡 𝐑𝐞𝐧𝐭 𝟏𝟎−𝐲𝐞𝐚𝐫 𝐓𝐫𝐞𝐚𝐬𝐮𝐫𝐲 𝐫𝐚𝐭𝐞

34. Illinois Farmland Price and Land Values

35. Uncertainties in the Future

36. Electric Cars

37. Work to grow hamburger in a Petri dish inside a laboratory

38. http://www. worldometers

40. Long-term Challenges Electric cars Change in diet away from meat
Exports to China and other income-growth countries

41. Summary Stable to eroding land prices Cash rents into 2018
Stable if $3.70 corn/$9.30 corn
Decreasing if mid to low $3.00
Uncertainty on demand