Farm land values across Illinois are up 14% in the first half of 2011 compared with a year ago and averages for excellent quality land have reached the $10,000 per acre milestone. This is according to a mid-year 'snapshot' survey of members of the Illinois Society of Professional Farm Managers and Rural Appraisers.
According to the survey, $8,500 is the new average for farmland rated as good quality with $7,200 the new level for average quality farmland and $5,800 for fair quality land. The variations in land quality is based on the following: excellent land averages over 190 bushels of corn per acre:; good quality land yields between 170 and 190 bushels; average produces between 150 and 170 bushels per acre; and fair quality farmland averages below 150 bushels per acre.
High commodity prices and low interest rates are most commonly cited as reasons for the higher prices being paid for land. In that regard, most expect corn prices to average between $6 and $7 per bushel for the 2011 crop. For soybeans, the majority expect prices to hover between $13 and $14 per bushel.
Share rents, including those leases with the modifications and custom farming, are the most prevalent comprising more than half of all farming arrangements.
The 2011 mid-year survey also focused on use of variable cash rental arrangements to gain information on this lease type that is growing in use. More than three-fourths expect an increase in the use of variable cash rental arrangements. Most of these are structured as minimum cash rent with a chance of bonus for the landowner.
Bonuses are generally based on gross revenue from farm yields are used in calculating gross revenue with price at the delivery point being used to determine gross revenues.