publication archive: farmland prices
May 3, 2013
A Historical Perspective on Illinois Farmland Sales
Farmland prices have soared in recent years, leading to increased interest in farmland markets and in factors affecting farmland prices. Sales records from the Illinois Department of Revenue (IDOR) allow for detailed comparisons of parcel-level information through time and for the construction of summary price trends and other descriptive statistics.Posted by Erik D. Hanson and Bruce J. Sherrick Permalink Tweet
April 4, 2013
Recent Price Changes Alter Relative Corn and Soybean Returns
Listen to MP3 podcastUSDA's March 2013 estimates of corn stocks were substantially higher than trade estimates, initiating a substantial decline in both corn and soybean prices during the past week. In this article, the relative profit impacts for 2013 crops of these price changes are examined. During the first quarter of 2013, price changes have increased expected soybean returns relative to expected corn returns.
Posted by Gary Schnitkey Permalink Tweet
March 29, 2013
Illinois Farmland Assessments - Current Issues and Considerations
For property tax purposes, Illinois assesses farmland on the basis of its "agricultural use" value rather than its "auction block" or market value. The agricultural use value is affected by the expected income from farming. The income potential in turn varies by soil productivity, productivity, and also changes as costs and prices evolve through time. To help dampen the impact of changes in farm incomes, the law "caps" the annual rate at which farmland assessments can change from year to year at 10% of its previous value. However, there is an emerging technical problem in the way the 10% cap functions, given the special historical context of farmland assessments in Illinois. A reasonable legislative solution would be to retain the "10% cap" but to provide a different answer to the question ... "10% of what?". The following paragraphs elaborate the purposes of the farmland assessment act, the calculation of agricultural use value, how the 10% cap currently works, the historical context that has created an unintended consequence of the 10% cap, and how the problem could be fixed by amending the farmland assessment law.Posted by Bruce J. Sherrick and Donald L. Uchtmann Permalink Tweet
March 14, 2013
TIAA-CREF and the University of Illinois Launch TIAA-CREF Center for Farmland Research
TIAA-CREF, a leading financial services provider, today launched the TIAA-CREF Center for Farmland Research at the University of Illinois. The new center will enhance the university's research and educational initiatives for its students and the agricultural community, including investors, farmers, researchers and businesses.Posted by Bruce Sherrick Permalink Tweet
August 24, 2012
Current Farmland Prices in Line with Farmland Returns and Interest Rates
Farmland prices continue to increase. U.S. Department of Agriculture (USDA) estimates the average 2012 Illinois farmland price at $6,800 per acre, 17 percent higher than the $5,800 price in 2011. The Chicago Federal Reserve Bank (FED) estimates price increases at 15 percent between July 1, 2011 and July 1, 2012 for northern and central Illinois farmland. At the same time farmland prices have increased, cash rents have increased and interest rates have decreased, thereby supporting the increases in farmland prices.Posted by Gary Schnitkey Permalink Tweet
August 7, 2012
Illinois Farm Real Estate Continues Double Digit Increase
Each year the National Agricultural Statistics Service of the USDA releases estimated average farm real estate values by state. The estimates are based on surveys of farmers from selected geographical areas. The surveys follow strict statistical guidelines. Estimated values maybe revised the following year based on additional information. Revisions may also be made based on data from the 5-year Census of Agriculture. The methodology and timing of the study has changed over time but the statistical information provides some insight as to the changes in farm real estate values from year to year.Posted by Bradley L. Zwilling Permalink Tweet
June 15, 2012
Farmland Values: What do Investors Say?
The Illinois farmdoc team and the Purdue University Center for Commercial Agriculture are hosting the 45th annual Top Farmer Crop Workshop, July 9-11, in West Lafayette, Ind. This year's workshop will cover a number of timely and important issues relevant to commercial farming operations. Farmland markets will be one of the issues examined. Farmland markets in most of the U.S. corn-belt have experienced substantial price appreciation since roughly 2001. At the upcoming Top Farmer workshop we will be presenting some interesting results of a recent Center for Commercial Agriculture survey of 246 farmland investors.Posted by Brent Gloy Permalink Tweet
October 12, 2011
October USDA Reports
Today the USDA released the October update of survey-based forecasts of the size of the 2011 U.S. corn and soybean crops. In addition, forecasts of consumption and ending stocks for the 2010-11 and 2011-12 marketing years for corn, and soybeans were updated. Following is a summary of those reports.Posted by Scott Irwin Permalink Tweet
September 9, 2011
Illinois Farmland Investment Performance,... Revisited,... Again...
USDA recently released the 2011 version of its annual summary of farmland values and rental rates, with final values for cropland in Illinois of $5,800/acre representing an 18% increase. Cash rent serves as a proxy for current income, and averaged about 3.2% for the same period. Total farm real estate values increased by roughly 16.3% for the year. Except for 2009, the past seven years have each seen double digit capital gains, and 3-4% annual current income. This performance during a period of unprecedented equity market volatility has resulted in substantially increased attention to the asset class, with an attendant increase in visibility of institutional investors, and resulted in some highly notable sales. Some have begun to question the sustainability or rationality of the current levels, and have used phrases including "bubble" and "overheated". At the same time, there is little evidence to suggest that income values and capitalization costs are anything but rational given the current low interest rates and high relative incomes. But all of these descriptors -- annual returns, capitalized values, volatility through time -- are best viewed as relative indicators -- if the equity markets had been returning 30% annually, the performance of farmland might look relatively poor, for example.Posted by Bruce Sherrick Permalink Tweet
July 29, 2011
Farmland Prices: Where to from Here?
Agricultural economists recently completed a series of articles dealing with farmland prices that appeared in Choices, a publication of the Agricultural and Applied Economics Association. A general consensus from these articles is that farmland prices are not in a bubble, but current farmland prices may reflect optimist expectations of future farmland returns (see Duffy and Gloy, Boehlje, Dobbins, Hurt, and Baker). Lower farmland returns or higher interest rates could result in lower farmland prices (see Schnitkey and Sherrick).Posted by Gary Schnitkey Permalink Tweet
Farmland Values
Farmland values are often viewed as the bellwether for the U.S. farm sector. Historically, booming farm incomes have been quickly capitalized into farmland values. Over the past year, cropland values in the Corn Belt have jumped more than 25% above year ago levels according to various university and Federal Reserve surveys. Moreover, ranchland values are posting strong double-digit gains in some regions of the country.Posted by Jason Henderson and Brent Gloy Permalink Tweet
March 17, 2011
Farmland Prices and Bubbles
The Illinois Society of Professional Farm Managers and Rural Appraisers released their annual farmland values report in Bloomington on March 16, 2011 (see www.ispfrma.org for order form). Between January 1, 2010 and December 31, 2010, farmland values increased substantially over Illinois, with variability in increases across regions and farmland qualities. Farmland increased by 14 to 18 percent for northern Illinois and 10 to 20 percent in central Illinois. Higher increases were noted in southern Illinois. Illinois Society results suggest an overall increase of 15 percent in Illinois farmland prices.Posted by Gary Schnitkey Permalink Tweet
