Farm land prices continue to spiral but Illinois’ farmers have a better outlook this year than their regional neighbors.
A softer agricultural land market will continue in 2016, says Farmers National Company (FNC), with values for high quality land holding steadier, while lower quality land values decline.
For states in the Mississippi river valley, downward trends are expected to continue.
“Values are down seven to 10 percent from six months ago,” said FNC’s Roger Hayworth. “The majority of land is still being bought by local landowners and farmers looking to add another 80 to 100 acres.
“If high quality farmland is for sale in a popular county, there will be a lot of local competition, especially if it hasn’t changed hands in 50 to 60 years and especially by neighboring farmers looking to expand. If it has been well maintained with proper drainage, tiling and or new irrigation equipment, then it sells well,” he said. “Buyers will pay a premium to buy acres in an area they really want.”
Hayworth said if commodity prices do not increase in 2016, there likely will be another slide in land values toward the end of the year.
“Since grain prices are down, farm operators have less to spend on land. They will pay up for quality acres,” Hayworth said. “The marginal land, B or C ground, is not highly sought after, so there are fewer aggressive buyers for those acres and their values can be down 10 to 20 percent.”
Still, land values remain historically high compared to five or six years ago, Hayworth noted.
“Seven or eight years ago, there was a spike off the charts. There were some properties in Indiana that had been valued at $3,500-5,000 that sold as high as $11,000-12,000, but now they’re back down to $8,500-10,000. That’s still very strong,” he said.
Top prices in this region can be seen in Illinois at $11,200 per acre on average for high quality land. These levels are followed by Indiana with values up to $9,000 per acre and Ohio at $7,300 per acre.