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Farmland values continued to climb the first half of 2022 in Illinois, according to the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA).
But ISPFMRA members are split in their opinions on whether the market is near a plateau or will continue to rise into 2023, based on the group’s mid-year land values snapshot survey released at the Farm Progress Show.
“In the first half of 2022, we’ve seen on average of an additional 18% increase in farmland values,” Luke Worrell, of Worrell Land Services and chair of ISPFMRA’s land values and lease trends program, told the RFD Radio Network.
This comes on the heels of an average increase in farmland values of 24% statewide in 2021.
“When you’re looking back at the last 18 months, we’re looking at a 40% increase,” Worrell said. “In my career (the past 15 years), I’ve never seen anything like it.”
The surge in farmland values is the result of everything from historically high commodity prices and rising investor interest to the overall inflationary environment in the U.S. and low interest rates.
“When we saw commodities start to rise at the end of 2020, it’s no surprise there’s a direct correlation to when (farmland) values started to trend up,” Worrell said.
But now, with tightening farm margins and higher interest rates compared to the last few years, more than half of ISPFMRA members feel the farmland market possibly reached a plateau and will settle near current values the second half of the year.
Just 12% think the market could still climb by another 3% or more heading into 2023.
ISPFMRA members also predict cash rents for 2023 could increase by $17 per acre for excellent productivity land and $8 per acre for fair productivity ground.
USDA’s National Agricultural Statistics Service (NASS) recently released its annual estimates of average cash rental rates in Illinois.
The state averages this year are $243 per acre for non-irrigated farmland (up $16 from 2021), $259 for non-irrigated land (up $17) and $39.50 for pastureland (down $1.50).
Of the 93 counties with enough information to generate projections, five counties in the state posted an average cash rent above $300 per acre for 2022 while three counties averaged less than $100 per acre, according to Mark Schleusener, Illinois state statistician.