2013 Illinois Land Values and Lease Trends - ISPFMRA Farmland Values & lease Trends 1 2013 Illinois Land Values and Lease Trends Published by the Illinois Society of Professional Farm

1IllInoIs Farmland Values & lease Trends

2013Illinois

Land Valuesand

Lease Trends

Published by theIllinois Society of

Professional Farm Managersand Rural Appraisers

2 2013 IllInoIs land Values ConFerenCe


Land Regions

1. Northeast

2. Northwest

3. Western

4. North Central

5. Eastern

6. Central

7. West Central

8. Southwest

9. Southeast

10. Southern



Table of ContentsLand Regions Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

ISPFMRA President’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2013 ISPFMRA Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

It Takes a Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Highlights - Illinois Farmland Values and Lease Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Farm Property Classifications and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Region 1 – Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Region 2 – Northwest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Region 3 – Western. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Region 4 – North Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Region 5 – Eastern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Region 6 – Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Region 7 – West Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Region 8 – Southwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Region 9 – Southeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Region 10 – Southern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76

Agricultural Price Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Expected Changes to Farm Programs in Next Farm Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Continuing Increases in Farmland Prices in 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Cash Rent Levels Increase in 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

The Illinois Farmland Market: Trends in Farmland Turnover and Values . . . . . . . . . . . . . . . . . . . . . 92

Index of Advertisers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97

Corporate Sponsors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99


ISPFMRA President’s Message

Bruce Huber, AFM, ARAPresidentIllinois Society of Professional Farm Managers and Rural Appraisers

I believe we should all feel blessed after the great year agriculture just experienced. Who would have thought that, with drought conditions and reduced production levels, farm income and farmland values could soar again by as much as 21 percent. In a time when other sectors of the U.S. economy are still struggling, agriculture is like a shining star –– one to be envied, admired and respected by investors on Wall Street who for years thought farmland and agriculture were in some way sub-par to other invest-ments.

It is our time to shine and shine brightly. The Illinois Society of Professional Farm Managers and Rural Appraisers (ISP-FMRA) is pleased to present to you the 18th annual survey of Illinois Farmland Values and Lease Trends.

The Illinois Society consists of 300+ well-educated and knowledgeable members who manage 4.2 million acres of Illinois farmland, appraise over 1 million acres of farmland and broker hundreds of millions of dollars of farmland each year. The strength of our Society is we have detailed knowl-edge of agriculture over a vast area.

This report is the result of hundreds of hours of volunteer time by our members across the state. The information is gathered from 10 regions. Each region has at least 5 individuals and as many as 10 contributors. Therefore, you can see it truly is a collective effort by our membership.

Special thanks go all of them for the time they put into creat-ing this product. Just as much thanks goes to Bruce Sherrick and Gary Schnitkey at the University of Illinois for collecting, organizing and making some sense of the information that has been funneled through them.

We apprecite your interest in this data and our organization. The ISPFMRA takes great pride in providing this information and appreciates your continued support of our organization.

These are great times to be involved in agriculture and we truly hope that you will join us again for the 2014 Land Values conference next year.

This is one of the most comprehensive surveys of this type and provides a great amount of detailed information. The Society hopes that you find this information useful and use it as a reference tool.

As questions come up in the future, we respectively ask that you remember and refer to those professionals who made this information available and have supported this project with their expertise and advertising dollars. You will find many of them in the pages of this report or you can locate one of our members by visiting our chapter website at www.ispfmra.org.


2013 ISPFMRA Board of Directors

Bruce Huber, AFM, ARA Hickory Point Bank Ag Services (217) 872-6291 [email protected]

President-Elect

Norbert L. Soltwedel, RPRA (217) 868-2833 [email protected]

Vice President Randy Fransen First National Bank of Dwight (815) 584-1400 [email protected]

Secretary/Treasurer

Gary Schnitkey, Ph.D. University of Illinois (217) 244-9595 [email protected]

Academic Vice President

Phil Eberle Southern Illinois University (618) 453-1715 [email protected]

Immediate Past President

Rich Grever, AFM Hertz Farm Management (815) 748-4440 [email protected]

Executive Director Carroll E. Merry ISPFMRA (262) 253-6902 [email protected]


It Takes a Team . . .General Chair

Dale Aupperle, AFM, ARA

Heartland Ag Group, Ltd.1401 Koester Drive, Ste. 100

Forsyth, IL 62535(217) 876-7700

Head - Survey GroupGary Schnitkey, Ph.D.

University of Illinois 300A Mumford Hall1301 W. Gregory DriveUrbana, IL 61801Phone: (217) 244-9595

Regional Data GroupDonald K. Cochran, ARA

Cochran Ag Services2453 East 700th Avenue

Wheeler, IL 62479Phone: (618) 783-8383

Regional Data GroupCharles Knudson, ARA, RPRA

1st Farm Credit Services2005 Jacobssen Drive

Suite CNormal, IL 61761

Phone: (309) 268-0286

Regional Data GroupBruce Sherrick, Ph.D.University of Illinois

College of ACES1301 W. Gregory Drive

Urbana, IL 61801Phone: (217) 244-2637

Advertising GroupJonathan Norvell, Ph.D., AFMUniversity of Illinois506 S. Wright St.Urbana, IL 61801(217) 244-6352

Land Values ConferenceWinnie Stortzum, ARA

Farmers National Co.109 E. Main St., Arcola, IL 61910

Phone: (217) 268-4434Tim Harris, AFMCapital Ag Property Services22263 1365 N. Ave.Princeton, IL, 61356Phone: (815) 875-7418

Region 1 Douglas Deininger, ALC

Capital Ag Property Services25846 Meadowland Circle

Plainfield, Illinois 60585Phone: (630) 258-4801

Region 2 David Dinderman

1st Farm Credit Services705 E. South StreetFreeport, IL 61032

(815) 235-3171

Region 2 Todd Slock

1st Farm Credit Services3184 North State Route 23

Ottawa, IL 61350(815) 433-1780


. . . of Professionals

Region 4 David E. Klein, AFM, ALC

Soy Capital Ag Services#6 Heartland Dr., Suite ABloomington, IL 61702Phone: (309) 665-0961

Region 5Mac Boyd, ARA

Farmers National Co.109 East Main Street

Arcola, IL 61910Phone: (217) 268-4434

Region 6Dean G. Kyburz

Busey Ag Services130 North Water Street

Decatur, IL 62523Phone: (217) 425-8290

Region 7Thomas Toohill, AFM

Soy Capital Ag Services3151 Greenhead Drive, Ste. A

Springfield, IL 62707Phone: (217) 547-2885

Region 8Dale Kellermann, AFM

Hickory Point Bank & Trust1400 S. Lincoln Ave., Ste. G

O’Fallon, IL 62269(618) 622-9490

Region 9David M. Ragan

Farm Credit Services of Illinois1506 E. Lafayette Ave.

Effingham, IL 62401Phone: (217) 342-6640

Region 10Phil Eberle

112 N. Lark LaneCarbondale, IL 62901Phone: (618) 457-0574

Region 3 Herbert Meyer, ARA

1st Farm Credit ServicesPO Box 70

Edwards, IL 61528Phone: (309) 676-0069


Illinois Farmland Values and Lease Trends:At a Glance

by Dale E. Aupperle, AFM, ARAGeneral Chairman, 2012 Illinois Land Values Survey and Conference

These are truly golden years for all of us in agriculture! Farmland values have extended their double digit annual increase through 2012! Our prime farmland is approaching $13,000 per acre (on average) - - up from $10,500 a year ago. And - - the rising tide is floating all boats - - as every class of Illinois farmland increased in value during the past year!

It takes a team to deliver the information you will find here in the 2013 Illinois Farmland Values and Lease Trends booklet. Our heartfelt thanks to those who spent countless hours providing us the details.

▼ ISPFMRA Members – The real world data you are experiencing comes from the files of over 70 members of our statewide

ISPFMRA. These folks are at work in the marketplace every day and share their expertise, opinions, and data from their active files. It’s the best you can get!

▼ University of Illinois – Bruce Sherrick, Ph.D. and Gary Schnitkey, Ph.D. are the best in their fields - - from the College of

ACES - - and unselfishly share their time and expertise with us. Bruce works with the mass of real estate transactions from each of the regional data groups and this year added a chart to each region showing us the trend! Gary is an expert at surveys and coordinates our mid-year and year-end surveys on farmland values and lease trends - - which helps us look over the mountaintop!

Several other professors in the College of Agricultural Consumer and Environmental Sciences contribute to our booklet by writing the very focused articles that you will find at the end of this report.

▼ Realtors® Land Institute – The members of the Illinois Farm and Land Chapter of the Realtors® Land Institute are professionals

that work in the farm real estate market across Illinois. We appreciate their insight, expertise and coop-eration on this project.

▼ A special note of thanks – ... goes out to the individuals and firms who advertise in our report and who support the Land Values

Conference each March.

Land Values and Rental Rates – There is a ton of information that follows in this report covering all six categories of farmland. To get you focused - - we have selected the excellent quality farmland in each region of the state to show you the posi-tive 2012 trend in land values and cash rents as noted below:

Excellent Quality Cash Rent Region Farmland Values Values

Northern Illinois (Regions 1, 2) $10,800 - $12,500 per ac. (up 10 - 30%) $325 - $400 per ac. (up 10%) Central Illinois (Regions 3, 4, 5, 6, 7) $9,000 - $15,000 per ac. (up 15 - 25%) $325 - $550 per ac. (up 5 - 15%) Southern Illinois (Regions 8, 9, 10) $8,000 - $10,500 per ac. (up 25 - 30%) $225 - $250 per ac. (up 10 - 15%)


Here is the good stuff – first-hand observations from a wide group of farm managers and rural appraisers across the great state of Illinois. We are a diverse bunch and have wide-ranging thoughts and opinions.

▼ Grain Prices – Mother Nature slashed corn and soybean yields in 2012 which resulted in skyrocketing grain prices.

$7.00 to $8.00 per bushel corn and $15.00 to $18.00 per bushel soybeans were significant and offset much of the yield drop.

▼ Net Farm Income – Farmland truly is what it earns! Net farm income across Illinois was stable-to-increasing this past

year due to higher commodity prices and the payouts from crop insurance programs. ▼ Drought Conditions – The Great Drought of 2012 resulted in some of the largest corn and soybean yield reductions our

members have ever witnessed. On an average, corn yields were down nearly 50 percent and soy-beans were reduced by one-third.

▼ Crop Insurance – These insurance product were available to all producers and until this year were

viewed as an expensive way to manage your risk. Not anymore! The overall revenue protection it provided Illinois farmers and landowners was amazing. Many net farm incomes were stable-to-rising in spite of the drought.

▼ Tile Drainage – Drainage is critically important on most Illinois farms. Farmers took

advantage of their profits and expanded their farm drainage through an amazing amount of tiling systems. Millions of feet of tile have gone in across Illinois.

▼ Interest Rates – Interest rates on operating loans and farm mortgages are at the lowest

ebb in anyone’s memory. Savings that result from “cheap money” allow interested landowners to bid more for farmlandand farm operators to pay more for cash rent. Agricultural participants worry that our next move in interest rates is higher.

▼ Auction Sales – An auction is an exercise in price discovery. There has been a sharp increase

in the number of auction sales as farmland values continue to rise. Those auction results are instant knowledge to a wide variety of participants and observers in the land market.

▼ Capital Gains Taxes – The threat of higher capital gains taxes caused a surge in the volume of land being offered for sale at

year-end 2012. Most sellers wanted to avoid the additional tax and rushed to close their transactions prior to year-end.

▼ Inflation – Most participants in Illinois agriculture view our government’s deficit spending as a formula for sig-

nificant future inflation. Farmland is a hedge against that possibility - - attracting widespread buyers to Illinois farmland.


▼ Mineral Rights – Illinois is experiencing an energy boom. Farmland owners across the state are becoming sensitive to

the prospect of coal, oil and natural gas under their properties which drives the value of the property and income from it.

▼ Wind Farms – An uncertain environment for wind energy caused many projects to be placed on hold throughout

2012. There was a flurry of activity at the end of the year when legislation extended the tax benefits to wind energy participants for one year.

▼ Estate Taxes – Rising farmland values are putting significant pressure on the estate tax exemption and are a major

concern of land owners across the entire state. ▼ USDA Programs – There is little need for price supporting programs in this environment and the farming community is

not focused on the safety net at this time. There is a general understanding that conservation funding will also be limited by funds available.

▼ Development Land – Farmland values have risen significantly while commercial development opportunities in general have

been stagnant. Current land values in many areas are nearly equal to development land values and op-portunities.

Here are some of the interesting facts that you will find in our year-end survey of the ISPFMRA member-ship. Read the details in Gary Schnitkey’s report at the end of this Land Values and Lease Trends report.

▼ Sellers of Farmland – Estate sales accounted for 58 percent of the volume of land on the market. The next category was

retiring farmers. ▼ Buyers of Farmland – Farmers accounted for 72 percent of the purchases made in 2012 as they reinvested into their busi-

nesses. Individual investors were the next largest group. ▼ Volume of Farmland Sold – Our members indicated there was a substantial increase in the volume of farmland sold during the last

half of 2012. ▼ Method of Sales – 44 percent of the transactions were sold by public auction, 13 percent by multi-parcel auction and 35

percent sold privately. Public auctions are increasing. ▼ Cash Rents – Our report covers a wide range of lease types and cash rental arrangements. In general – the increases

in rents between 2013 and 2012 were less than those from the previous year. ▼ Type of Leases – 43 percent of the leases in 2013 will be share rent leases. On cash rent leases our members expect the

rents to stay the same in the upcoming year unless commodity prices decline to significantly low lev-els. The majority of lease arrangements are still one year in length.


In summary – Last but not least - - and our membership has been asked a million times - - Is this a bubble that is get-ting ready to burst? All of us would love to know the correct answer to that question! Hopefully - - there is a collective wisdom in the general response of our ISPFMRA members.

Nearly half of my colleagues (in Gary’s survey) expect Illinois farmland values to rise in 2013 and on into the upcoming five years. Those professionals suggest that we might return to our normal uptrend that averages 5 percent to 7 percent annually. The risk of a 20 percent drop in value seems small to them at this point in time. Yes - - our agricultural outlook is positive.

What an exciting time to participate in Illinois agriculture as a landowner, farm operator, or a new in-vestor. Don’t forget that members of the ISPFMRA are the experts that you can turn to when you need advice on all types of Illinois agriculture. We hope you benefit from the information in the 2013 Land Values and Lease Trends booklet. Good luck to all of us in our future agricultural ventures.

Friends of the Chapter We’re excited about a membership offering that might be right for you!

The Illinois Society of Farm Manag-ers and Rural Appraisers has widened its networking focus by creating a special membership category – “Friends of the Chapter.” We invite anyone with an interest in our orga-nization, but who does not otherwise qualify for membership (as practic-ing farm managers, rural appraisers, or agricultural consultants) to join us!

As a “Friend of the Chapter” you will enjoy all the benefits of the Illinois Chapter except voting rights. You will be listed as a Friend of the Chapter in our membership directory, and will receive the ISPFMRA Newsletter. You will qualify for discounted member rates on all Illinois Chapter-sponsored courses, meetings and events. Friends of the Chapter also en-joy a strong networking connection to our organization and its members as we focus on the business of agriculture.We encourage you, and any interested person who does not manage or appraise Illinois farmland or provide agricultural consulting as a business, to join us. We welcome you!For further information visit www.ispfmra.org and click on the “Friends of the Chapter” link.


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Farm Property Classifications & Definitions To standardize our data collection, the following definitions were used in developing the various categories. Produc-tivity indexes based on Bulletin 811 are used in developing these profiles.

• Excellent Productivity Tract – productive durable soils with a significant amount of those soils with productivity indexes of 133 and above; well maintained; located in desirable community with excellent access to transportation and markets.

• Good Productivity Tract – productive soils with a significant amount of those soils holding productivity indexes of 117 to 132; located in desirable community with good transportation and market access.

• Average Productivity Tract – average-to-good soils with a significant amount of those soils with productivity indexes of 100 to 116; located in a community with ad-equate services available; fair transportation and market access; soils may show evidence of erosion, fertility loss, improper drainage or noxious weed infestations.

• Fair Productivity Tract – below average-to-fair soils with a significant amount of those soils with productivity indexes below 100; located in fair com-munity with fair-to-poor transportation and market access; topography may be adverse with serious hazards (flooding, erosion, etc.).

• Recreational Tracts – tracts are normally high in non-tillable acres with soils that may be subject to erosion and/or flooding. Tracts are typically purchased by nonresident owners for hunting, fishing and other recreational pursuits.

• Transitional Tracts – tracts that are well lo-cated and have good potential for development uses within a few years. Tracts may be used for commercial or residential uses.

Productivity Indices (P/I) Ranges

Excellent 133 - 147 (Highest)

Good 117 - 132

Average 100 - 116

Fair Less than 100

(See Page 95 for P/I map)


Doug Deininger, ALC – ChairCapital Agricultural Property Services, Inc., IL

Nicole Bromberek 1st Farm Credit Services, Ottawa, IL

Dan Flanagan, ALC Flanagan Realty, St. Charles, IL

Jeffrey Hacker, ARA 1st Farm Credit Services, Bourbonnais, IL

Todd Slock, ARA1st Farm Credit Services, Ottawa, IL

Andy Weidner 1st Farm Credit Services, Sycamore, IL

Region 1 - Northeast

The year 2012 witnessed an increase in the volume of sales due to anticipated capital gains tax increases in 2013. All values except development and possibly

recreational land increased during the year. Uncertainty during the summer due to the drought had land values stag-nant, but once harvest took place land values accelerated again. Land values increased after harvest once farmers realized their soybean yields would be just less than aver-age and they totaled their corn crop insurance payments. Land owners spent more money to fine tune fertility, add tile drainage, and remove fence rows due to high land val-ues. Land values in Northern Illinois have been somewhat undervalued when compared to sales in Central Illinois the last several years. Early 2013 sales indicate that trend may be changing and that increasing land values trend in North-ern Illinois will continue into the new year.

Excellent TractsUncertainty caused by the 2012 summer drought raised concerns about land values. Once the crop was harvested and crop insurance checks were collected, land values quickly increased. High productivity soils showed their value during the drought. Surprisingly good yields on only the best ground, in addition to their proven high yield for crop insurance, paid off well. Northern Illinois tracts remain undervalued compared to similar soil productivities found in Central Illinois. Farmers remain the primary buyers using cash and low fixed long-term interest rates. Investors seem wary at these high price levels. We expect fewer sales in 2013 due to the higher capital gains taxes and related uncertainty. Values may

Land Value and Cash Rent TrendsOverall Summary

% Change Change in rate of land Ave. Cash Rent/Ac. Total in /Acre turnover (up, steady, Ave. Cash Rent % Change on recentlyFarm Classification Value/Acre from 2011 down) and % Per Acre from 2011 negotiated leases

Excellent Productivity $10,800 10.0 Up 10 % $350 up 10 % $375Good Productivity $9,300 8.0 Up 10 % $300 up 10 % $350Average Productivity $7,300 12.0 Up 10 % $250 up 10 % $275Recreational Land $5,000 11.0 Steady Transitional Tracts $15,000 0.0 Down 10 %


Reg

ion 1

need to increase the additional 5 percent capital gains rate before sellers are willing to pay the additional taxes. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcDekalb Nov 216.0 98.0 143.0 12,000Kane May 148.0 99.0 147.0 11,103McHenry Jan 80.0 91.0 139.0 10,429Grundy Mar 143.0 95.0 139.0 10,000LaSalle May 78.0 98.0 143.0 10,500Kankakee Aug 126.0 97.0 133.0 8,500Will Dec 40.0 90.0 1340 7,208 Good Productivity Tracts

Good productivity farms that are square or rectangular with few easements or obstructions, such as electric tow-ers, remain competitive with higher productivity tracts. Drainage, or the potential for it, added to those values, and new buyers are removing fence lines and spending money on tile and fertility to increase productivity on less-produc-tive soil types. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcDekalb Dec 146.0 87.0 127.0 9,700Kane Sep 225.0 98.0 125.0 11,495Boone Aug 213.0 98.0 129.0 8,574Dekalb Oct 192.0 90.0 125.0 10,000Grundy May 80.0 96.0 127.0 9,750LaSalle Dec 77.0 90.0 131.0 9,250Will Jun 120.0 98.0 124.0 8,250Will Nov 60.0 98.0 128.0 8,500

Average Productivity Tracts Average productivity tracts followed the trends of the ex-cellent and good productivity tracts. Money will be spent on tiling and capital improvements again to increase their productivity to match other farms. The long term use of no-till and cover crops will be used on these farms in par-ticular to increase organic material and eventually water- holding capacity of these lower producing soils. Sale Total percent P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcDekalb Mar 57.0 79.0 118.0 7,250Boone Mar 80.0 82.0 118.0 8,000McHenry Feb 61.0 84.0 117.0 6,269LaSalle Jan 40.0 97.0 113.0 7,372Will Oct 157.0 95.0 116.0 8,500Will Mar 146.0 95.0 114.0 7,914Kankakee Apr 40.0 94.0 108.0 7,000Kankakee Oct 40.0 82.0 115.0 7,950

Recreational Productivity Tracts The continued high unemployment rate and poor economic outlook again left recreational values stagnant. In addition, county forest preserves and other conservation groups are running out of funding for new acquisitions around the collar counties. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcLaSalle Dec 40.0 0.0 6,000LaSalle Oct 48.0 0.0 4,531Boone Oct 50.0 50.0 6,514

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Region 1 Land Values Summary Chart: 2001-2012

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Transitional Property

It appears the inventory of bank-owned properties is now coming to an end. Values have not dramatically increased, however, there are fewer of those properties in inventory. Many of the undeveloped properties in Will County that were planned for estate-type development still have sewer lids or roads running through what were farm fields. Those properties are selling at a discount from comparable farms nearby. The sale shown at $25,750 per acre had already been annexed and zoned for very high density residential of up to 600 units on 67 acres. This is the highest sale recorded for McHenry County since the 2008 crash.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcWill Dec 60.0 112.0 12,500Will Sep 75.0 104.0 7,850Will Sep 81.0 113.0 7,200Kane Jun 117.0 122.0 10,000McHenry Dec 67.0 124.0 25,750Kane May 800 122.0 17,500


Reg

ion 1

Region 1 - Rental Market Conditions Typical Existing Cash Rental Rates for: Percentages of NEW leases that are: Avg Length Most representative Lowest 1/3 Middle 1/3 Top 1/3 of lease rate on NEW cash lease Flexible Farm Classification by rate by rate by rate contract in area for 2012 Cash cash Share Other

Exc. Productivity 300 350 400 1 yr 400 95 5 Good Productivity 200 250 300 1 yr 300 95 5 Avg.Productivity 200 250 275 1yr 275 100 Fair Productivity 150 180 200 1 yr 200 100 Recreational Land 50 75 100 100

Lease Trends

Throughout the summer we were uncertain what fall would bring with the drought. Soybean yields were better than expected and crop insurance payments for the corn created another record income year for producers. Farmers remain the primary buyers and they, more than anyone, appreci-ate the value of top-quality soils. Crop input costs are the same for excellent-versus-average productivity soils and therefore rental demand for top-quality soils increased the

greatest amount. We continue to see a trend towards large farm operators and the possibility of more flexible rents in 2013 due to the drought. Farmers have a renewed inter-est in improving drainage and fertility due to the high land costs. Now more than ever it will be cheaper to rent rather than own farmland so expect rents to be more competitive than ever.

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Reg

ion 1

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David Dinderman – Co-Chair1st Farm Credit Services, Freeport, IL

Todd Slock – Co-Chair1st Farm Credit Services, Ottawa, IL

Dan Legner, ARA 1st Farm Credit Services, Princeton IL

Justin Levi Martin1st Farm Credit Services, Monmouth, IL

The year 2012 started out well with decent moisture and a strong spring price on corn. However, as the year pro-gressed, the rains stopped and the region began to slip into one of the worst droughts we have seen in years. Because of the drought and expected short yields, commodity prices began to run up and we saw corn top out for the year at $8.30 on August 21.

There may have been slight hesitation this summer as to whether or not buyers were going to push the market even higher. In the Northwest region, that hesitation came to a screeching halt when producers began to see better-than- expected yields. The one-year median sale price change on excellent productivity farms from 2011 to 2012 was up 25 percent and good productivity farms were up 30.4 percent.

Region 2 is the northwest 11 counties of Illinois. The Mississippi River sets the western boundary, with the Illinois/Wisconsin boarder setting the northern

boundary. It extends to the eastern edge of Bureau, Lee, Ogle and Winnebago counties and the southern edge of Bu-reau, Henry and Mercer counties. Region 2 is diversified, from rolling hills to deep prairie soils to sandy river bottom ground scattered throughout the region. This diversification can lead to a wide range in crops, rents and land values.

This is the third year in a row that the market values have experienced double digit increases, and is the highest one year change among the excellent and good quality land classes. The drivers have remained the same being strong earnings and low interest rates. Of the two factors, strong earnings are the leading cause.

Region 2 - Northwest



Exc. Productivity $11,000-$12,500 Up 25-30% Up 20-25% $325-$400 Up 10-20% $425-$475+Good Productivity $8,500-$10,500 Up 25-30% Up 25-30% $265-$300 Up 10-20% $325-$400Avg. Productivity $6,000-$8,000 Up 15-20% Up 25-30% $225-$275 Up 10-20% $225-$300Fair Productivity $4,300-$5,500 Steady Steady $185-$240 Up 5-10% $200-$250Recreational Land $2,700-$4,000 Down 5-15% Up 5-10%


Reg

ion 2

Excellent Productivity TractsExcellent farms generally have deep prairie soils with a productivity index ranging from 133 to 147. These farms also have minimal waste acres and are easily farmed. We selected 36 sales in the excellent productivity category, representing typical transactions for farmland sales in the 11-county region. The sales price ranged from $7,550 to $14,600 per acre with a median sale price of $11,000. These farms have seen a significant increase in value over the final 60 to 90 days of 2012. Based on the selected sales, the median sale price for 2012 compared to 2011 is up approximately 25 percent and is showing an increase of 52.8 percent over 2010 excellent tract sales.

A vast majority of the farms were purchased by local farmers who have increased purchase power due to the favorable returns of 2012. Sales in excess of $12,000+ per acre were seen in multiple counties and three counties had sales match or exceed the $14,000-per-acre level in Region 2. Excellent quality farm sales in this area had a median value of $83.79 per productivity point.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcOgle Jan 74.0 97.7 137.0 9,959Ogle Jul 74.5 93.1 139.0 12,000Ogle Dec 60.3 94.8 140.0 12,500Winnebago Jan 165.0 87.7 136.0 7,550Winnebago Feb 80.0 94.6 136.0 9,750Winnebago Nov 60.0 90.2 133.0 10,270Carroll Jan 80.0 96.1 138.0 10,813Carroll Sep 158.0 95.2 137.0 12,373Carroll Nov 154.0 91.1 135.0 12,831Stephenson Apr 195.0 93.9 141.0 9,487Stephenson Dec 111.0 96.6 136.0 11,907Stephenson Dec 69.0 81.6 139.0 9,681Lee Apr 120.0 90.3 139.0 8,958Lee Jul 400.0 98.3 139.0 10,775Lee Nov 159.0 94.0 140.0 11,503Lee Nov 238.0 98.5 134.0 14,000Whiteside Dec 92.5 98.0 137.0 14,600Whiteside Dec 171.0 75.0 139.0 14,500Bureau Jan 234.0 97.0 142.0 9,068Bureau May 152.0 97.2 133.0 10,600Bureau Aug 56.0 93.2 139.0 10,900Bureau Nov 79.0 98.3 141.0 13,989Bureau Dec 119.0 97.3 139.0 14,200Henry Feb 80.0 98.6 142.0 10,500Henry Apr 76.0 97.5 138.0 12,000Henry Oct 79.0 99.4 138.0 11,500Henry Nov 47.0 95.7 142.0 12,000Mercer Aug 20.0 98.5 144.0 10,500Mercer Nov 82.0 97.9 142.0 11,000

Good Productivity TractsGood farms tend to have productive soils with slightly more undulating-to-rolling land with a productivity index ranging from 117 to 132. These farms can vary in the amount of waste acres, but typically still have a high per-

Adjoining land owners and current tenants did seem to pay some of the largest premiums when purchasing land this year. Many saw 2012 as the time to gain control of these properties given the strong earnings, low interest rates and the fear of not getting another chance at buying a particular property for a long time.

Region 2 has the highest concentration of dairy in the state, and also has a number of hog operations. Livestock and milk producers did generally see a slightly more favorable market for their commodities in 2012, but also saw increas-ing feed costs as the year progressed. The producers that were able to grow their own feed were able to help offset these high costs.

Wind farms continue to be developed and proposed in seven of the 11 counties in Region 2 with most of the activity being centered in Lee and Bureau counties where there are seven wind farms constructed, under construc-tion, or proposed. Some of these proposed wind farms have seen strong opposition in 2012. It was rumored that a wind easements in a couple of the counties were left to expire or were withdrawn, and we have seen one wind farm, in another county, go into bankruptcy. However it was imme-diately purchased by another company. There are signs that the wind farms may not be as favorable as once believed.

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IL_FarmlValuesTrendsAd_2013.indd 1 1/14/2013 11:43:51 AM


centage of tillable land. Good productivity farms make up a majority of the farmland in Region 2.

We selected 53 sales, representing typical transactions for farmland sales in this region. Sales prices ranged from $5,620 to $13,300 per acre with a median price of $9,300, based on the sales selected. These farms have also expe-rienced significant increase in value during the final 60 to 90 days of 2012. The median sale price for 2012 compared to 2011 is up approximately 30.4 percent and an increase of 51.8 percent over the 2010 median sales price. A vast majority of the sales were purchased by local farmers. Investors also seem to favor these good productivity tracts as they typically have strong rental potential. Good quality farm sales in this area indicated a median value of $75.55 per productivity point.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcJo Daviess Jan 97.0 86.6 124.0 7,251Winnebago Feb 143.0 91.5 123.0 7,073Winnebago Apr 80.0 80.1 121.0 5,938Winnebago Dec 114.0 93.5 128.0 8,600Winnebago Dec 73.0 91.6 131.0 10,000Stephenson Mar 40.0 95.3 128.0 10,000Stephenson Oct 173.0 97.7 120.0 10,201Stephenson Dec 143.0 87.3 123.0 8,056Ogle Apr 274.0 91.7 119.0 7,850Ogle Oct 289.0 80.7 120.0 7,535Ogle Nov 73.0 93.8 128.0 12,201Ogle Dec 127.0 91.2 132.0 12,000Ogle Dec 69.0 97.7 122.0 12,275Carroll Sep 238.0 90.0 131.0 8,350Lee Mar 80.0 98.3 120.0 8,250Lee Aug 79.0 97.4 129.0 10,101Lee Sep 352.0 94.4 121.0 8,750Lee Nov 80.0 96.0 123.0 10,000Lee Nov 151.0 87.0 121.0 9,358Whiteside Feb 235.0 95.0 120.0 9,997Whiteside Mar 922.0 92.0 121.0 6,232Whiteside Apr 199.0 92.0 124.0 10,490Whiteside Sep 78.0 98.7 128.0 10,353Whiteside Sep 150.0 97.6 119.0 10,462Whiteside Sep 77.0 95.8 129.0 7,698Whiteside Oct 80.0 92.0 124.0 11,250Whiteside Dec 353.0 91.0 131.0 13,300Bureau Jul 156.0 95.2 128.0 8,700Bureau Oct 81.0 93.5 132.0 9,550Bureau Oct 80.0 97.0 130.0 8,500Bureau Nov 78.0 98.0 119.0 12,600Bureau Nov 1080 84.2 131.0 8,900Henry Oct 118.0 95.1 130.0 9,200Henry Nov 44.0 99.4 131.0 8,182Henry Nov 95.0 91.0 125.0 11,500Henry Nov 99.0 93.0 126.0 11,650Mercer Jan 77.0 92.0 118.0 6,550Mercer Oct 61.0 96.0 128.0 11,500Mercer Oct 370 93.0 125.0 9,300Mercer Nov 1050 90.4 125.0 9,950Rock Island Apr 77.4 68.0 122.0 5,620Rock Island Oct 131.0 94.0 123.0 8,800Rock Island Oct 80.0 81.0 119.0 5,900

Average Productivity TractsAverage farms tend to fall into two categories: rolling tim-ber soils or sandier soils with a productivity index ranging from 100 to 116. These soils may show evidence of ero-sion, fertility loss, improper drainage or excessive waste acres. We selected 36 sales, representing typical transac-tions for farmland sales in our region. The sales price ranged from $3,981 to $9,334 with a median sale price of $6,709. The median sale price increased 17.2 percent over 2011 levels and a 45.1 percent increase over 2010 levels. The one-year change on the average quality farms was not nearly as significant as the excellent and good qual-ity farms. However, the two-year change was more in line with the better quality farms. Average quality farm sales in this area indicated a median value of $69.34 per productiv-ity point. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcJo Daviess Jan 80.0 87.0 106.0 5,600Jo Daviess Jun 108.0 52.2 103.0 3,981Stephenson Jan 154.0 91.6 105.0 6,075Stephenson Feb 105.0 94.3 112.0 7,047Stephenson Dec 118.0 96.2 110.0 6,424Ogle Mar 49.0 70.4 117.0 5,600Ogle Nov 162.0 83.3 109.0 6,709Ogle Dec 160.0 64.8 118.0 8,250Carroll May 173.0 95.2 114.0 8,600Winnebago Jun 210.0 70.4 116.0 5,600Winnebago Dec 129.0 91.8 116.0 7,649Whiteside Feb 70.0 94.9 113.0 8,405Whiteside Mar 70.0 94.0 111.0 6,394Whiteside Aug 130.0 94.0 111.0 7,900Whiteside Oct 191.0 96.3 113.0 9,334Whiteside Dec 96.0 94.0 109.0 7,200Whiteside Dec 480.0 84.9 100.0 7,000Bureau May 66.0 92.0 107.0 5,503Henry Jan 41.0 72.2 115.0 7,239Henry Aug 112.0 91.8 114.0 9,104Henry Nov 80.0 88.3 115.0 7,500Mercer Sep 87.0 96.0 117.0 8,000Mercer Nov 62.0 88.7 104.0 4,450Mercer Nov 122.0 61.0 109.0 4,600Rock Island Mar 103.0 77.0 110.0 5,950Rock Island Mar 146.0 52.7 104.0. 4,100Rock Island Oct 80.0 68.5 115.0 5,463

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Reg

ion 2

Fair Productivity Tracts

Fair productivity tracts in this portion of the state tend to fall mostly on the western side of the region and are in two different categories. The northwest portion of the region tends be rolling and sloping hills of predominately timber soils, which are subject to erosion. The southwest part tends to be a mixture of sandier soils, river bottoms and rolling hills. These soils tend to be below-average-to- fair soils with productivity indexes below 100, rolling to sloping topography, large amounts of waste acres and are located in areas with diminished access to grain markets and linkage routes.

A minimal number of 2012 sales were available in Re-gion 2 that would be classified as fair productivity tracts. Much of this type of land had previously been purchased by buyers from the eastern portion of the state for recre-ational uses and as building sites for weekend homes. This demand has subsided considerably, and most fair tracts are now marketed with a focus on the agricultural buyer. Fair quality land has provided a means for smaller operators and beginning farmers to enter the market and/or expand their operation.

The sales price indicated a range from $3,900 to $5,556 with a 2012 median sale price of $4,600. The median sale price decreased about 5.6 percent over 2011 levels. The two year change is still up almost 27.8 percent. The data

may suggest a flight to higher quality ground. However, the analyses are based on a very limited number of sales and are easily skewed by individual sales.

Fair quality farms in this area indicated a median value of $65.75 per productivity point.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcJo Daviess Jan 66.3 78.3 93.0 4,281Jo Daviess Feb 85.0 61.9 95.0 5,100Winnebago Feb 96.0 69.0 86.0 3,900Winnebago Feb 102.0 84.4 88.0 4,500Winnebago Apr 50.0 77.2 93.0 4,700Carroll Dec 59.0 90.9 84.0 5,566

Recreational Tracts

Recreational tracts in Region 2 have continued to struggle and have been the hardest hit land segment, aside from transitional land. This market relies heavily upon buyers from the eastern portion of the state. Supply of recreational land still significantly exceeds market demand.

Recreational values vary widely depending upon location and attributes, with a median sale price of $3,640 on the 2012 sales in Region 2. The median sale price is down 14.6 percent over 2011. The two-year change in median sale price is down 18.9 percent. The northwestern portion

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Region 2 Land Values Summary Chart: 2001-2012of Jo Daviess County seems to have some of the higher selling prices, which is most likely a reflection of the name recognition of Jo Daviess County by Chicago-land buyers, and its close proximity to the shop-ping and entertainment located in Galena and East Dubuque, Illinois and Dubuque, Iowa. Historically, a significant portion of the recreational market has been driven by buyers who plan to build a weekend house on the property along with the use of the land for recreational pursuits. Sales that were purchased at higher values were those tracts that were cer-tified timber and under management programs or located in the northwest portion of Jo Daviess County. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcStephenson Feb 74.5 82.1 4,650Jo Daviess Oct 82.8 45.4 4,227Carroll May 74.0 35.5 3,921Stephenson Jul 36.0 35.4 94.0 4,200Mercer Nov 120.0 35.2 101.0 3,000Jo Daviess Mar 44.0 31.1 104.0 4,500Mercer Nov 130.0 30.2 111.0 3,575Carroll Mar 23.0 28.3 104.0 4,171Carroll Jul 112.0 25.8 116.0 3,704Jo Daviess May 91.0 24.2 104.0 4,000Mercer Jun 46.0 24.0 99.0 2,857Ogle Mar 101.0 21.0 97.0 3,971Rock Island Jun 73.0 17.0 113.0 3,428Jo Daviess Oct 75.0 13.3 90.0 4,092Bureau May 44.0 3,500Henry Jan 66.0 3,150Bureau Jan 50.0 2,795Bureau Mar 38.0 2,760Bureau Aug 107.0 2,700Henry Aug 115.0 2,159

Lease TrendsMore landlords and tenants in Region 2 are moving to variable cash rent arrangements. The variable cash rents are intended to reflect both farm yields and market lev-els to determine how much the tenant pays. The northern portion of Region 2 has been slower to convert to variable leases; however their popularity has been increasing.

The vast majority of the rents in the northern portion of Region 2 are still typical cash rents with a length of term from one to three years. However, some cash rental tenants are opting to include bonus payments to landlords, such as a percentage of net or gross receipts, or as discretion-ary additional payments by the farmer for future renting privileges. Some of the variable rents observed are struc-tured with a base rent plus an additional percentage paid

on net or gross income of the farm. One other variable rent observed in this area was structured with a base rent plus a percentage of gross income after the tenant realized a predetermined profit level. Although variable leases can provide the most amicable structure for farm leases, great care must be taken by both the landlord and tenant for detailed guidelines of record keeping, input purchases, and how and when commodity prices are set.


Reg

ion 2


Exc. Productivity 325 350 400 1-3 yrs 425-475+ 84 15 1 Good Productivity 265 300 325 1-3 yrs 325-400 84 15 1 Avg. Productivity 225 245 275 1-3 yrs 225-300 84 15 1 Fair Productivity 185 220 240 1-3 yrs 200-250 84 15 1 Recreational Land 25 40 60 1-3 yrs 30-60 99 1Pasture 35 45 65 1-3 yrs 40-80 99 1

Other Lease Trends and PressuresSome upward pressure on pasture rental rates has oc-curred due to the limited amount of land and price of feed. Drought conditions were tough on hay production in some local areas as well as across the country, leading to a diminished supply of hay. Some producers are look-ing to pasture as a means of stretching feed stocks, which has increased competition and rental rates on pasture land. This situation seems most prevalent in areas with higher concentrations of dairy and beef operations.

Most of the pasture rental information is based on counties in the northwest portion of Region 2 including Jo Daviess, Carroll and Stephenson. Jo Daviess and Carroll counties still have a significant number of cow-calf operations, while Stephenson County pastures are typically used for summer grazing of dairy heifers and dry cows.

According to the National Agricultural Statistic Service the Region 2 area of Illinois has about 310,000 cows and calves as of 2007. As with tillable land cash rents, pasture rents also experience a wide range in price and terms with many rents in a range from $40 to $80/acre. In many cases pasture land is being converted to tillable land, when pos-sible, to capture returns from cash grains. Some pastures are rented along with the tillable land and are not weighed heavily in the cash rent negotiations between the landlord and tenant. Other pastures are rented for considerable sums.

Much of this divergence is based on location of the pas-ture, availability of water for the cattle, condition of the fencing, fertilizer application, and if the pasture is mowed.

Another consideration is the duration of the grazing rights. Typical pasture leases include the growing season which runs from sometime in April to as late as November, de-pendent on the weather. However, some cow-calf opera-tions are opting for leases that include grazing of the pas-ture during the summer months and the harvested ground for the late fall and winter, essentially making these leases be year-round. Much of the driving force of the pasture market has been the high feed costs of grain and hay of the past few years.














Your FIRST Choice

Dan Legner ARAOffice (815) 872-0067, PrincetonToll Free (800) 388-3276Mobile (309) [email protected]

Todd Slock Office (815) 625-1086, Rock FallsToll Free (800) 688-3276Mobile (815) [email protected]

Dave DindermanOffice (815) 235-4159, FreeportToll Free (800)6 95-3276Mobile (815) [email protected]






Reg

ion 3

Herb Meyer, ARA – Chair1st Farm Credit Services, Edwards, IL

Justin Levi Martin1st Farm Credit Services, Monmouth, IL

Curtis Moffit, ARAFarm Credit Services of Illinois, Pittsville, IL

Jarad Royer1st Farm Credit Services, Macomb, IL

Can current land prices be sustained? One year ago the comments in this region started out with the statement. And the rest of the story is: There were

localized neighborhoods where the same prime land sales were significantly higher ($14,000) than other parts of the region. Spring 2012 auctions showed strong increases in prices. Early summer sales showed even higher prices, and the post-harvest fall auctions showed even stronger prices.There has been a 30+ year trend of lower interest rates and higher grain prices.

How long can these two trends continue? The interest rate trend is about as low as it can go and yet the rates, and es-

pecially the longer term rates, have continued to decrease over this past year. The lack of returns on other invest-ments and fear of losses are also attributed as creating large pools of money to chase good farmland. The prime land in this area sold at prices in excess of $8,000 in 2008 and 2009. Those 2008 sales took place dur-ing a period of increasing interest rates. The lower inter-est rates and the current drought prices of grain provide a significantly different market than four years ago. Cash rental rates are still catching up with the increased grain prices of recent years. Some farms, with long tenancies, are still rented at very low rental terms which results in some groups reporting much lower rental terms in their annual reports than true market rents.

Region 3 - Western

Land Value and Cash Rent Trends Overall Summary


Exc. Productivity $9,000-$17,000 +10 to +50 % Up 50% $300-$550 Up 20% $400Good Productivity $5,500-$12,000 +10 to +33 % Up 50% $275-$450 Up 20% $350Avg. Productivity $3,700-$7,000 +5 to +15 % Steady $150-$250 Steady $250Fair Productivity Recreational sales 0 Steady $100-$200 Steady $200Recreational Land $2,200-$3,500 -10 to +5 % Steady $25-$50 Steady $50River Bottom Sales $5,100-$11,500 Two big auctions


The grain market prices were a concern as recent as the spring of 2012. Land prices increased on the low volume of land that was available in 2011 and the first half of 2012. The volume of land increased in the fall of 2012 due to concerns about the “The Fiscal Cliff”. The volume of average and fair quality land sales remain low with the volume of acres and number of sales being reduced compared to several years past. This increase in volume in-dicates that the perceived risk of a decrease in the step up exemption in the estate tax and a risk of increased estate tax rates had an influence on the volume of land that was sold in the fall of 2012.

Excellent Productivity TractsPrime quality land sale prices have shown strength in auc-tion sales through the years since the 2008 financial crisis. The market increased from the 2011 range of $8,500 to $11,000 to $9,000 to $17,000 in 2012. The range is exces-sive due to including sales from the two market seasons (spring and fall). Again, the strength in the spring market was in the face of grain marketing companies talking about the possibility of a fall grain market in the $3.00 range.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcWarren Nov 194.1 96.0 144.0 13,875Warren Mar 80.0 99.0 144.0 10,400Warren Dec 245.0 100.0 143.0 12,500Warren Aug 76.9 96.0 143.0 9,500Stark Oct 82.3 98.0 142.0 15,500Knox Nov 161.6 98.0 142.0 14,600Knox Nov 60.0 98.0 142.0 14,400McDonough Oct 60.0 100.0 142.0 14,000McDonough Feb 81.5 100.0 1420 11,600McDonough Jul 105.9 95.0 142.0 11,240McDonough Jan 365.1 98.0 142.0 10,600Warren Nov 40.0 99.0 142.0 9,000Knox Dec 45.0 98.0 141.0 17,500Knox Dec 45.8 98.0 141.0 17,000Stark Dec 80.0 99.0 141.0 14,050Fulton Jun 91.0 96.0 141.0 13,500Stark Nov 106.7 98.0 141.0 13,250McDonough Aug 81.1 99.0 141.0 12,500Knox Jan 93.6 94.0 141.0 9,700McDonough Dec 35.0 100.0 141.0 8,500Knox Nov 63.2 98.0 140.0 13,200Henderson Dec 160.0 79.0 140.0 9,400Schuyler Oct 83.1 0.0 139.0 12,800Fulton Jun 137.0 97.0 138.0 12,500Schuyler Oct 160.0 0.0 138.0 12,000Fulton Mar 80.0 89.0 138.0 10,015McDonough Mar 160.0 96.0 138.0 8,800Knox Nov 81.9 97.0 137.0 11,850Peoria Dec 75.0 99.0 136.0 18,000Fulton May 54.6 88.0 136.0 11,556Warren Mar 148.0 97.0 136.0 8,682Schuyler Feb 120.4 0.0 136.0 8,113Peoria Dec 80.0 90.0 135.0 13,000Knox Nov 40.3 94.0 135.0 12,700Stark Feb 100.0 97.0 135.0 9,850Fulton Mar 78.1 93.0 135.0 9,243McDonough Dec 60.0 99.0 135.0 9,000

Good Productivity Tracts

People in the land professions typically focus on sales in the excellent land prices. The distinction between excel-lent and good classified land is significant. The land in this “Average” class tends to take more time and per inputs acre to farm than the excellent land. These farms have more irregular shaped fields and are more rolling within the fields.

Farm CareFarm Management • Real Estate SalesGene Vaughan, AFMMANAGING BROKER / OWNER

Box 260Elmwood, IL 61529

Tel: 309-742-2273Cell: [email protected]



309-662-4444Toll Free: 888-897-2276


Experience for You!

SOLD!


Matt Wyss, AFM


Tim Woods*




Reg

ion 3

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcPike Nov 78.1 100.0 125.0 10,882McDonough May 38.5 100.0 122.0 8,000Peoria Feb 40.0 98.0 125.0 8,000Pike Oct 83.7 97.0 125.0 12,100Pike Sep 62.0 97.0 119.0 9,025Peoria Aug 337.4 96.0 120.0 8,475Stark Oct 128.0 96.0 119.0 8,000Adams Sep 37.0 95.0 130.0 10,050Pike Oct 79.2 93.0 122.0 10,900Fulton Nov 50.0 92.0 129.0 12,350Fulton Dec 80.0 91.0 126.0 10,000Peoria Jan 49.0 88.0 132.0 9,000Henderson Nov 154.2 88.0 118.0 12,300Knox Aug 317.6 87.0 123.0 6,900Warren Oct 117.8 870 117.0 7,200Peoria Jan 207.1 86.0 121.0 7,200Stark Oct 40.0 85.0 119.0 9,800Pike Sep 85.7 85.0 118.0 8,600Pike May 71.5 84.0 118.0 5,010Stark Oct 80.0 83.0 132.0 12,100Peoria Dec 80.0 81.0 124.0 8,700Henderson Jul 110.6 78.0 117.0 5,500Warren Feb 233.8 77.0 118.0 5,493Peoria Nov 82.6 73.0 123.0 10,400Pike May 242.0 66.0 118.0 4,525Knox Nov 77.0 53.0 123.0 6,234Peoria Sep 395.0 51.0 118.0 5,823Peoria Oct 32.2 31.0 123.0 6,779Schuyler Aug 34.0 0.0 130.0 7,400Pike Nov 78.1 100.0 125.0 10,882

Average Productivity Tracts

These land sales are not increasing in value as rapidly as the better land. The slower rate of increase is a continuation from the past couple of years. These sales tend to include a significant percentage of wooded land. The lack of increases in the recreational market makes for a partial explanation. There is a high volume of recreational land that is available in the market. Therefore, the crossover of demand from the recreational land market into this class of land is not as strong as it was prior to 2008. The buyers in this market fre-quently refer to the “Dollars per tilled acre” indicating that they are minimizing the value they contribute to the wooded parts of the properties. There is a higher risk of low produc-tion on these farms than the better land. This class of land can be better recreational land than the all wooded land and can collect reasonable rent.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMcDonough Aug 42.6 100.0 116.0 7,200Knox Feb 184.8 96.0 116.0 5,700Henderson Apr 102.1 94.0 109.0 5,300Henderson Sep 81.3 86.0 116.0 5,000McDonough Aug 47.0 84.0 116.0 6,500Adams Sep 31.4 83.0 112.0 7,000Adams Nov 130.1 80.0 102.0 6,400Pike Jun 294.0 79.0 108.0 5,100Pike Sep 66.8 750 115.0 6,900Henderson Nov 171.1 72.0 115.0 6,578Henderson Nov 63.6 71.0 115.0 7,600Pike Oct 92.8 68.0 110.0 3,750Fulton May 115.0 65.0 109.0 4,887Henderson Mar 70.2 64.0 114.0 2,705Pike Sep 71.2 60.0 113.0 3,600Adams Apr 123.0 60.0 101.0 2,883Brown Jul 80.0 59.0 110.0 4,687McDonough Apr 83.6 53.0 104.0 3,675Schuyler Dec 126.0 52.0 116.0 4,920Pike Mar 450.0 51.0 114.0 3,797











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Recapitalization

Recreational TractsRecreation sales have a broad range of prices with the broker-assisted land sales showing the higher prices. The auction sales tend to demonstrate weakness in this part of the Region 3 land market. The difference in quality of properties is often the explanatory difference according to market participants. Seclusion, along with access, old growth timber, open areas for food plots, and lakes are determinants of differences. The Conservation Stew-ardship Plan Rules are providing a second means to avoid the vacant land reassessments on these tracts of land.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcHenderson Apr 88.5 81.0 85.0 3,200Brown Nov 134.7 49.0 113.0 2,750Knox May 20.0 45.0 116.0 3,000Pike Jul 249.3 43.0 112.0 3,000McDonough May 134.8 38.0 107.0 2,250Adams Sep 785.0 34.0 111.0 3,000Fulton Nov 154.7 27.0 101.0 2,530Schuyler Nov 100.5 26.0 14.0 2,600Henderson May 110.8 23.0 109.0 3,350McDonough Aug 120.4 0.0 0.0 3,700Knox Nov 21.0 0.0 0.0 3,650Stark Dec 47.9 0.0 0.0 3,133Henderson May 31.0 00 0.0 2,500Schuyler Dec 24.8 0.0 0.0 2,200

River Bottom Land Tracts

Fall 2012 had two big land sales of river bottom land. One of the auctions was in the Mississippi River and the second auction was in the Illinois River. These sales have wide differences on per-acre prices. The range in prices of each tract is primarily influenced by the drainage and the loca-tion in the bottoms.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcPike May 331.0 100.0 130.0 11,000Adams Dec 153.3 100.0 122.0 6,750Adams Oct 300.5 99.0 125.0 5,100Fulton Dec 190.0 98.0 121.0 6,100Schuyler Dec 160.5 97.0 131.0 11,500Adams Oct 228.5 97.0 124.0 8,000Schuyler Dec 74.4 95.0 122.0 10,350Schuyler Dec 153.0 85.0 126.0 7,700


Reg

ion 3


Exc. Productivity 200-300 300-400 400-500 1 350-450 25 50 25 Good Productivity 200-250 250-350 350-450 1 350-400 25 50 25 Avg. Productivity 150-200 200-250 250-300 1 225-275 30 20 50 Fair Productivity 100-150 150-200 200-250 Recreational Land 25-40 40-60 60-100 50 100 Pasture 25-35 35-45 45-65 1 40 100

Lease Trends

The trends to flexible rental terms has become very com-mon in the few years since the Farm Service Agency decided to recognize these leases in the government programs. The higher grain prices have also added to the desire by landlords to receive higher rent. The tenants also desire to limit the risk of the high cash rents. These flexible leases are especially popular in family leases..












Your FIRST Choice

Herb Meyer ARAOffice (309) 676-0069, EdwardsToll Free (800) 747-0069Mobile (309) [email protected]

Jarad RoyerOffice (309) 833-4600, MacombToll Free (800) 833-4390Mobile (309) [email protected]

Justin MartinOffice (309) 734-8484, MonmouthToll Free (800) 432-6267Mobile (309) [email protected]

Curt Moffit, ARACell (217) [email protected]






Reg

ion 4

David Klein, AFM, ALC – ChairSoy Capital Ag Services, Bloomington, IL

Doug Greiner, AFMFirst Mid-Illinois Bank & Trust, Mattoon, IL

Doug HensleyGorsuch-Hensley Real Estate, Canton, IL

Don Jacobs, AFMBloomington Farm Management, Bloomington, IL

Chuck Knudson, ARA, RPRA1st Farm Credit Services, Normal, IL

Randy McKee1st Farm Credit Services, Normal, IL

Region Four holds a variety of soils, crops and location influences, which can lead to great ranges in value from one end of the region to the other.

The northern portion of Marshall, Putnam and Livingston Counties have been heavily influenced by the 1031 tax-deferred exchange buyers coming from the collar counties of Region 1 in the past. While fewer 1031 tax-deferred exchanges are impacting purchases, the revenue streams from those investments are resulting in “reinvestment dol-lars” being poured into additional farmland purchases in the region.

The center of the region has some impact from the larger communities of Bloomington, Morton and Pekin. The southwestern portion of the region tends to be most

influenced by the general agricultural economy and has continued to be very tightly held. This positively impacts farmland values in that area of the region. Opportunities for farmer buyers to expand seed corn production acres under irrigation led to some very high land sales in Mason and Tazewell Counties this year.

The entire area benefits from excellent grain market outlets as the Illinois River and rail terminals influence the north-ern and western portions of the area while ethanol and soy processing plants are located throughout the region. End-users like ADM, Cargill, Solae and Aventine all exist in Region 4. This area also contains abundant wind energy opportunities as some of the “best wind” at 50-80 meters high exists in this region of the state. While many proj-

Region 4 - North Central



Exc. Productivity $11,000-$14,000 +20% Up 10% $300-$400 Up slightly $325-$425Good Productivity $9,000-11,500 +15% Up 15% $225-$325 Up slightly $230-$350Avg. Productivity $6,000-9,000 +3% Down 5% Variable based upon irrigationFair Productivity Insufficient Data Recreational Land $3,600-4,400 +5% Steady to slightly higher Transitional Tracts Insufficient Data Lower Other Sales (wind turbine influenced) Insufficient Data Down-only one farm with a wind turbine sold in 2012


Activity varied by county in Region 4. Marshall and McLean Counties all saw increases in auctions and land offered for sale during 2012, while Putnam, Livingston, Mason, Tazewell and Woodford counties all had relatively the same or fewer transactions than 2011.

Most of the farmland transactions occurred in the final quarter of the calendar year with November and December setting a fast pace as owners decided to sell before poten-tial impending tax increases occurred to capital gains and healthcare.

There was a wider range of prices than in previous years, especially in the “good productivity” soils, and the varianc-es closely followed the percentage of tillable acres. Tracts of land with 80 to 160 acres seemed to sell at a premium as the optimal size for most buyers. The aesthetics of a farm also seemed to be adding a bigger premium or bigger discount to land, especially if sold by auction.

The areas having transitional land and the values associ-ated reflecting any change have shrunk back to land adja-cent to existing development. Only one sale in the region resulted in a transitional value being added to the agricul-tural values and it was developed immediately upon clos-ing. During 2012 we also noticed land that was acquired during the past decade as a result of 1031 exchanges from northern Illinois being placed back on the market as some

ects were being explored in this region some options on land are being allowed to expire. Because of the lack of federal funding and the changes in the Illinois Commerce Commission rules on green energy sources for the state of Illinois, many projects have been slowed considerably. One project near Minonk was completed this year.

High grain prices and respectable 2011 production gave current farm owners money to reinvest in a generally tight market during the first half of 2012. After uncertainty through the summer, grain prices really started to rise in July and August and peaked shortly thereafter as it became evident the corn crop was not going to be delivered at har-vest across the country.

This increase in the grain prices, combined with histori-cally low interest rates, a low dollar value, and continued worldwide demand for commodities in general, made farmland a “desired safe haven asset”. Alternative invest-ments that typically carry low asset price volatility saw their dividend/yields drop further, making farmland look even more attractive. While inflation is not a part of the near-term horizon, many long-term investors are thinking about the way our general economy may work its way out of the current condition, and how farmland’s historical re-cord as a good “hedge” against inflation might benefit from such ownership as well as the future needs of an earth with over 9 billion people.

RELIABLE

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HARDWORKING




FARM MANAGEMENT



309-662-4444Toll Free: 888-897-2276


Experience for You!

SOLD!


Matt Wyss, AFM


Tim Woods*




Reg

ion 4

of those owners decided to sell their reinvestment land in Region 4 and replace it with land located back in Region 1 that may have dropped in value back to agricultural levels.

The first farmland sale over $15,000 per acre in Region 4 was made in November in northern Livingston County. The highest priced sale was $15,200 per acre paid at auc-tion for a 156.2 acre tract on the McLean/Tazewell county line, west of Stanford, later that month. Cash rents started climbing before the 2012 crop was planted and continued higher into 2013 as landowners searched for ways to lock in a portion of the profits being generated by farmers. Some farmers were eager to sign new leases and discuss making 2013 crop sales to lock in profits early while others looked at the higher 2013 cash rental rates as a way to reward land-owners for positive margins generated in 2012 through the combination of crop insurance and grain revenues.

Excellent Productivity TractsExcellent productivity farmland continued to lead the way to record highs throughout the year in Region 4. The first to eclipse $14,000 was in McLean County in February. Then, in August, an 80-acre tract in Woodford County sold for $14,400 per acre. In early November a 40-acre tract in Livingston County brought $15,100 per acre and later that month a 157.7 acre farm in McLean County sold for $15,200 per acre. All new highs were set at public auc-tions, and despite historically poor crops and farmland supply increases in November and December, high quality

farmland prices continued to escalate at year-end. Sev-eral privately negotiated transactions were made in the low $70’s to low $80’s per PI point during the first seven months of 2012. The highest priced farms in this region were selling for $100-110 per PI point, and many were in the upper $80’s to $90’s range, especially at year-end. The majority of farm transactions were between 40 and 160 acres in this region. This segment of the market is also where the higher prices were being paid for high quality farmland resulting in very well attended auctions by both farmers and investors, with both being very competitive throughout the region. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcWoodford Mar 80.0 100.0 141.6 13,000McLean May 160.0 100.0 140.5 11,375Livingston Nov 60.0 100.0 136.8 13,700Livingston Nov 40.0 100.0 136.5 15,100Marshall Nov 47.34 100.0 135.3 12,250Woodford Aug 40.0 100.0 134.4 12,300McLean Jun 162.6 99.7 136.0 11,700McLean Mar 210.1 99.6 143.1 12,000McLean Jun 66.0 99.3 141.8 13,851Woodford Aug 80.0 99.1 144.0 14,400McLean Nov 334.4 99.1 137.1 13,034McLean Nov 989.1 99.0 137.7 12,500Livingston Nov 41.0 98.7 137.3 13,150McLean Nov 157.7 98.4 141.7 15,200Livingston Nov 124.9 98.4 137.0 12,400McLean Feb 159.8 98.3 139.2 14,100Marshall Nov 46.0 98.2 134.0 12,250McLean Nov 80.0 98.0 133.6 13,000McLean Feb 59.9 97.9 134.9 11,900McLean Nov 60.0 97.8 142.2 14,200Livingston Oct 158.0 97.8 133.5 10,550Woodford Mar 80.0 96.9 136.6 12,100McLean Dec 160.6 99.6 138.0 13,500Marshall Jul 78.0 95.3 143.2 11,100Tazewell Mar 80.0 95.0 137.6 10,400McLean Dec 65.2 93.8 137.4 11,250Tazewell Mar 155.0 92.5 143.3 10,400Woodford Nov 76.1 90.9 140.6 14,000Woodford Aug 38.6 89.5 136.4 11,000Livingston Nov 74.00 85.6 135.7 13,800Livingston Nov 82.0 81.3 137.9 13,350









Farm CareFarm Management • Real Estate SalesGene Vaughan, AFMMANAGING BROKER / OWNER

Box 260Elmwood, IL 61529

Tel: 309-742-2273Cell: [email protected]


Good Productivity TractsA large percentage of the soils throughout Region 4 fall into this land class. While this land class will typically respond well to high management, these properties often have some less attractive features such as a lower percent-age of tillable acres, more slope, or slightly tighter subsoils than the Excellent soil quality farms. This can be particu-larly evident in a dry year such as 2012. As a result of this volatility, investors can sometimes find a wider range of values in this land class throughout Region 4.

We found this land class continued to have a high supply in 2012, but it was met with adequate demand, especially in the last half of the year. By year end the typical price paid per soil productivity index per tillable acre was running in the mid $70’s to low $90’s. The highest prices paid for this land class in 2012 occurred at auctions, with some reaching as high as low $12,000’s per acre on farms with a higher percentage tillable and nearly level topography in Livingston County. You will notice a large price disparity in this land class between the higher productive soils with a higher percentage tillable versus the farms in this class at the lower end of the soil productivity range and lower percentage of tillable acres. Whether the “top end prices” being paid for these soils will continue in 2013 will depend heavily on grain prices, potential crop use, interest rates and the supply of farmland available in the overall marketplace.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMarshall Nov 147.8 101.8 129.8 10,500Mason Nov 39.0 100.5 116.3 8,675McLean Jun 99.5 100.2 130.9 9,850Livingston Mar 78.2 99.9 131.1 11,000McLean Nov 77.1 99.7 125.2 11,600Mason Nov 157.0 99.4 118.5 8,675McLean Dec 196.5 99.2 131.8 10,000Livingston Feb 78.0 99.1 123.0 8,800Mason Mar 79.8 99.0 133.0 9,000Marshall Nov 34.4 98.8 129.7 9,100McLean Apr 33.0 98.8 123.2 9,898Livingston Feb 75.3 98.5 127.7 9,800McLean Nov 86.3 98.2 130.3 10,300McLean Mar 75.0 98.2 130.0 9,750Marshall Feb 80.0 98.0 131.6 7,050Livingston Nov 80.5 97.9 127.1 10,023McLean Mar 78.9 97.8 128.1 11,200McLean Nov 80.0 97.5 132.5 11,400Mason Feb 333.9 96.5 133.0 9,550Woodford Feb 79.5 95.0 125.0 6,700McLean Dec 80.0 94.3 131.2 10,500Woodford Nov 40.0 94.3 126.6 7,200Livingston Nov 120.7 93.8 124.0 10,023Woodford Jan 74.0 91.1 124.7 9,000Mason Jan 132.7 90.0 122.0 4,700Marshall Oct 91.5 88.0 120.2 7,700Tazewell Oct 99.9 85.1 120.2 9,000McLean Feb 40.0 85.0 124.5 8,500Marshall Nov 195.3 81.9 131.0 7,550Marshall Oct 131.3 80.7 126.4 7,700





Your FIRST Choice

Charles Knudson ARA, RPRAOffice (309) 268-0286, NormalToll Free (800) 247-3353Mobile (309) [email protected]

Mike Morris ARA, MAIOffice (309) 268-0136, NormalToll Free (800 )247-3353Mobile (309) [email protected]

Dale Vogl AFM, ARAOffice (309) 268-0284, NormalToll Free (800) 247-3353Mobile (309) [email protected]

Randy McKeeOffice (309) 268-0132, NormalToll Free (800) 247-3353Mobile (309) [email protected]

Rob BrinesOffice (309) 268-0248, NormalToll Free (800) 247-3353Mobile (309) [email protected]


Reg

ion 4

Region 4 Land Values Summary Chart: 2001-2012Average Productivity TractsVery few acres of Region 4 are in this land class. Most of these soils are found along the Illinois River area in Putnam, Woodford, Tazewell and Mason County or north of Pontiac in Livingston County. Most “dry land” sales occurred in the $4,500-$7,500 per acre range. Higher priced sales in this land class typically included some center pivot irrigation of the sandier soils south of Pekin in Tazewell and Mason Counties. One such sale occurred near planting time where a farm that was set up for seed corn pro-duction with two center pivot irrigation systems was sold. The final sales price was $12,500 per acre, purchased by the farmer. While the soil is of lower qual-ity, the irrigated acres can be very profitable for growing seed corn, or other specialty crops making the land twice as valuable as it would be without the ability to irrigate the land. The majority of land sales in this class sold in the $40-lower $60 per PI point range during 2012. There was limited supply, and while farmers would make land in this class of soils bring respectable prices, there certainly was a preference by buyers for higher quality land as we increased the supply of good and excellent soils near year-end,with some tracts offered to the market not getting sold and closed by year-end.







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DeKalb815.748.4440

Geneseo309.944.2184




Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMason May 318.1 100.0 111.3 12,500 Tazewell Sep 153.1 98.0 97.0 11,250 Livingston Apr 135.0 96.8 114.4 6,300Livingston Apr 117.0 99.3 117.8 6,000Livingston Apr 80.0 98.6 113.6 7,100Livingston Apr 40.0 98.0 117.1 5,550McLean Oct 47.4 97.0 111.7 7,050Mason Jan 200.0 96.6 115.4 5,100Livingston Apr 80.0 84.6 107.5 4,530Marshall Sep 144.3 75.0 117.0 6,100Mason Jan 140.0 72.7 117.9 4,500


heartlandag-sp.com

Heartland Ag Groupof Springfield, Inc.


Optimize yourFarmland Investment

Put our experienceto work for you

• Farm Management• Farmland Sales• Farmland Auctions• Farmland Purchases• Farm Appraisals• Farm Consulting Services

205 S. Walnut, P.O. Box 686,Rochester, IL 62563Telephone: 217.498.9660 Email: [email protected] Free: 888.486.1469

Recreational TractsThere was a slight increase in the number of recreational tracts sold during 2012. This increase in supply was met with slightly improved demand as recreational land con-tinues to be seen as a “soft market” outside of a 15-20 mile radius of geographical population centers. Some strength exists where the relative proximity to Bloomington, Morton or East Peoria is just a short drive away. Tract size is important in this category as larger tracts require more funds than many recreational buyers can afford. Highest prices were paid in the 20-60 acre range.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMarshall Feb 138.5 69.6 116.0 5,400McLean Nov 133.8 65.0 108.9 5,475Mason Feb 40.0 60.0 108.7 3,500McLean Sep 44.3 59.8 138.1 5,000Tazewell Mar 66.5 55.6 100.0 4,000Marshall Dec 20.3 54.5 111.9 6,750McLean Jan 30.0 54.3 125.8 5,000Marshall Dec 34.8 52.6 106.7 6,500Marshall Dec 20.3 49.8 123.8 6,900McLean Jan 63.1 45.3 126.1 5,544Marshall Dec 20.0 45.0 120.0 6,200Marshall Feb 72.0 8.3 4,600Marshall Mar 32.5 7.7 3,385Woodford Feb 58.6 0.0 0.0 5,548Woodford May 62.3 0.0 0.0 4,000Woodford Jun 40.0 0.0 0.0 4,500Woodford Jun 27.4 0.0 0.0 3,834Mason Jan 20.0 0.0 0.0 4,000Mason Jan 205.0 0.0 0.0 1,800Mason Jan 203.0 0.0 00 2,000

Transitional TractsOnly one major and “true” transitional land transaction was revealed from our research. It was farmland sold from an implement dealership to a trucking firm looking to expand. Commercial development absorbed previously contracted land during 2012. If land wasn’t immediately developing, the purchase price was reflected at agricultural value. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMcLean Jan 20 96.5 132.5 22,500

Other Tracts – Wind TurbineOnly one tract sold during 2012 with a wind turbine located on the farm. This tract sold early in the year to an individual performing a 1031 exchange. Algonquin Power and Light’s project near Minonk in Woodford and Livingston Counties was the only project to build turbines in this region during 2012. The 200 megawatt “Minonk Wind LLC” project was completed at the end of the year. All other planned wind turbine expansion has been put on hold, or options are being allowed to expire on undevel-oped projects, such as those at Benson and Cropsey.

Sale Total % P / I on $ Total # AnnCounty Date Ac Till Till Ac Price/Ac Turb RevMcLean Mar 114.4 97.8 128.5 9,750 1 $5,589



Exc. Productivity 200 300 425 1 1 50 30 10 10Good Productivity 175 250 300 1 1 70 20 5 5Avg. Productivity 125 150 200* 1 Recreational Land 5 1

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Recapitalization

Lease TrendsStraight cash rent leases dominate Region 4. Base plus bonus leases exist where a percentage of the crop’s gross proceeds are used to calculate the amount of rent paid. This is the most common form of variable cash rent lease in Region 4.

Intricacies such as crop insurance proceeds were important in 2012. Some leases included this component and some did not. Other variable leases also exist that have a starting rent based upon the federal crop insurance guarantee for a farm and then flex upward. These are somewhat more complicated than many landowner-tenant relationships can comprehend, but are a very effective way to accurately distribute actual returns between landowner and farm ten-ant. Our recommendation is that you contact an Accredited member of the ISPFMRA in this region to discuss any specific farm situation. Each landowner’s specific goals and objectives can best be met with a tailored farm man-agement plan for their property.

*Some average productive land, where seed corn or spe-cialty crops are grown, and irrigation exists, have gener-ated very high rental rates on good and average soils in this region. However, the majority of land in this region is operator owned or crop-share leased, where these op-portunities exist. As a result, these leases can skew this productivity class because the soils in this class, without irrigation, would not be able to consistently generate the production revenue to sustain this rental rate. With the irri-gation, however, higher rental rates are able to be paid and average substantially more rent per acre, comparable to the excellent productivity soils levels.


Visit our office at 301 E. Cedar St. in LeRoy.

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At HeArtlAnd Ag group ltd., our experience in agriculture makes your investments more valuable and our services invaluable. Our services include:

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Reg

ion 5

Mac Boyd, ARA, ALC Farmers National Co., Arcola, IL

Laura EngerFarm Credit Services of Illinois, Mahomet, IL

Cory KauffmanFirst Mid-Illinois Bank & Trust, Mattoon, IL

Brian Neville, AFMFarmers National Co., Danville, IL

Winnie Stortzum, ARA, ALC Farmers National Co., Arcola, IL

Brian Waibel, AFMBusey Ag Services, Champaign, IL

The strong and rising land market that has been with us for several years continued to grow stronger in 2012. Land has appreciated throughout 2012 and

remains very strong as the year rolled over into 2013.

Farmers were still the major buyers and drivers of this land market in 2012 and investors were still active in the mar-ket because the alternative investments did not measure up to the returns profile a farm investment had to offer. This purchasing competition between the two groups kept prices increasing during the entire year as properties came on the market for sale. Commodity prices remained strong, because of the drought in this region during the 2012 crop year, and the anticipated crop shortages that were expected in the Corn Belt because of the weather problems. The crop

insurance program absorbed a lot of the risk out of this farm economy. It allowed the farmers the general knowledge that this program would provide a “floor” for their operations and help them from having big losses in the 2012/2013 mar-keting year. The poor national economy that has kept things very uncertain still offers no alternative investments that could measure up to farmland returns. This lack of alterna-tives continues to direct a lot of investor money to farmland, and the farm returns and appreciation during the year have proved it to be wise decision in 2012.

All categories of row crop land experienced increases in sales prices. While the market was already at all-time highs at the beginning of the year, these prices went up dramati-cally by 15 to 20 percent, or more, as we went through 2012.

Region 5 - Eastern



Excellent Productivity $9,000-$13,000 Up 10% - 15% Steady $425 - $525 20% - 25% Higher $425 - $525Good Productivity $8,000 - $10,000 Up 10% - 15% Steady $300 - $400 10% - 20% Higher $300 - $400Average Productivity $6,000 - $8,500 Up 20% - 30% Steady $250 - $350 10% - 15% Higher $250 - $300Fair Productivity $4,500 - $6,500 Up 25% - 30% Steady Too little data No data No dataRecreational Land $3,500 - $4,500 No data No data No data No data No dataTransitional Tracts No data No data No data No data No data No dataOther Sales (describe) No data No data No data No data No data No data


The use of land auctions continued to be a large factor in the marketing process in 2012. Auctions were used to put buyers in a competitive bidding situation with each other. This produced “new highs” on sales prices many times in this region. Some farms were still being sold privately and exchanged as well. However, in many instances, the higher priced sales were properties sold at auction. This resulted in a fairly volatile land market with diverse prices being paid over a relatively short period of time. In some instances farms with similar soils, productivity, and topog-raphy were selling for substantially different prices. Some of the higher land prices were the result of this competitive bidding by adjacent farmers and adjacent or area landown-ers who had money to invest, but not much land available to purchase in their particular area. Farmers also continued to bring in their current landlords and other absentee inves-tors to the market. These landowners had already formed an agreement to allow these tenants the right to farm the land if they were able to get it purchased.

Because of the economy, investors still favored land in this region for several reasons. Farmland is in a very strong earnings position, with excellent rental income resulting from high commodity prices, and the knowledge of a 5-10 year history of very positive appreciation of land values. Because of the high production capabilities of land in this region and the more rural nature of the area, it has always been a highly pursued area in which to purchase farm-land. This region has some of the state’s highest yielding farms. This production has been converted into some of

the stronger cash rents and farm incomes over the course of time and especially over the last few years. It is an area in which farmland prices are largely based on the land’s production capabilities and not on its transitional location leading to some future commercial or residential expan-sion use. This factor seemed to increase the desire of many buyers to put their money in land during this investment time period. It was still difficult to find farms to buy during 2012. It is apparent that land still enjoys a “favored asset” status over most other investments at this time. With an uncertain economic climate and interest rates at a very low level, land became one of the best places to invest cash in 2012.

Cash rents in the Eastern Region were also getting stronger as landowners, farm managers, and farm tenants negoti-ated new leases for the 2013 crop year. Cash rent values have been increasing substantially over the past three or four years. Because of strong commodity prices and im-proved profitability of the past few years, farmers tended to be very aggressive in 2012 to lease additional land to farm. As farm managers, landowners, and exchange buyers received more information about cash rents being paid in Region 5, there was a tendency for them to competitively move towards higher cash rent values. In some cases these cash rent leases were substantially higher. Differences in individual farm cost structures and financial status in their own farming operations were the deciding factors in the level of cash rent a farmer was willing to pay in this cur-rent environment.

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Reg

ion 5

Excellent Productivity Tracts Sales prices for Excellent Productivity properties were generally in the $9,000 to $13,000 per acre price range, although there were some scattered sales above that range. These price ranges set all-time highs for farm properties in Region 5.

Sales prices varied in all counties based on the quality of the farm and location (physical location as well as buyers’ preferences). There was a low but steady supply of Class A farm properties throughout the year. Our national econo-my, while showing signs of bottoming out in some areas, still showed major problems in 2012. Those problems have been developing over the past two or three years and still show sluggish-to-struggling economic conditions in many areas. Agricultural economies were the exception.

Foreign economies were also struggling, which also affected each seller’s consideration for where to invest excess funds. Interest rates were still declining during the year, reaching historically low levels in 2012. In addition, traditional alternative investments were not rebounding or performing at a pace to give potential sellers any alternate place to invest with any confidence. Landowners were still hesitant to put farms on the market in this uncertain eco-nomic climate because alternative investment opportunities were not as strong as these investments in the land. There were no competing investments which were considered to be as safe or as profitable as their farm investments.

Competitive bidding for the land sales that did occur took farm sales prices to new levels throughout the year. It was a very aggressive market. Some farms with similar soils and locations in a given community sold at very different prices, depending on the method of selling and what kind of buyers were in the market at that time. Many of these farms, which were most often sold at auctions, once again set new price levels throughout 2012. Estates and multi-owner properties made up a large supply of farms on the market. However, absentee owners who were watching the increases in the sales prices, were still a factor, especially as we worked through the last half of 2012. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcChampaign Jan 119.4 99.0 142.3 13,250Champaign Mar 60.0 98.0 138.8 10,200Champaign Mar 59.9 98.0 140.4 7,500Champaign Mar 40.0 98.0 142.9 10,500Champaign Mar 120.0 100.0 141.4 10,000Champaign Mar 80.0 98.0 134.7 9,400Champaign Mar 71.2 98.0 143.4 10,819Champaign Apr 44.9 98.0 141.5 8,027Champaign Apr 160.0 98.0 141.3 12,500Champaign Apr 120.0 98.0 143.1 12,500Champaign Apr 120.9 98.0 143.6 12,000Champaign May 62.5 96.0 141.8 7,200Champaign May 117.3 98.0 140.6 11,500Champaign May 32.8 98.0 140.9 13,000Champaign May 58.8 96.0 133.6 10,250Champaign May 40.0 98.0 143.8 11,750Champaign May 40.0 99.0 143.7 11,100Champaign Jul 40.3 98.0 143.6 11,000

Champaign, ILPh: (217) 356-5756 Fax: (217) 356-8609

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Champaign Jul 91.8 99.0 142 12,311Champaign Jul 44.0 99.0 143.7 12,000Champaign Aug 198.0 97.0 134.6 9,811Champaign Aug 37.0 97.0 141.7 10,000Champaign Sep 33.0 97.0 140.9 10,395Champaign Sep 40.0 980 143.5 9,000Champaign Sep 69.5 97.0 133.8 10,200Champaign Sep 35.0 99.0 143.0 10,000Champaign Oct 80.0 94.0 136.4 10,100Champaign Oct 60.0 99.0 139.4 8,975Champaign Oct 93.1 99.0 141.4 13,600Champaign Nov 80.0 97.0 143.6 11,875Champaign Nov 60.0 99.0 142.4 20,251Champaign Dec 53.2 97.0 137.0 10,348Coles Jan 78.0 97.0 140.4 9,000Coles Apr 80.0 100.0 133.1 9,300Coles Jun 160.0 99.0 132.7 9,000Coles Jun 145.0 86.0 134.6 9,043Coles Jul 81.5 97.0 134.7 9,500Coles Aug 160.0 99.0 133.0 9,500Coles Nov 46.0 100.0 138.6 11,700Coles Dec 158.0 92.0 137.1 11,200Douglas Jan 158.6 97.8 138.8 8,300Douglas Jan 83.4 99.0 138.9 9,900Douglas Jan 80.0 100.0 142.3 9,168Douglas Feb 50.8 100.0 139.3 11,200Douglas Mar 75.0 92.0 133.0 10,100Douglas Apr 79.2 99.0 139.6 9,050Douglas May 94.4 99.0 137.0 10,914Douglas Aug 76.9 95.0 139.1 9,492Douglas Aug 75.0 98.0 139.4 9,734Douglas Aug 52.0 100.0 136.2 9,000Douglas Aug 80.0 99.0 141.3 8,745

Douglas Sep 26.2 100.0 138.7 8,400Douglas Sep 78.4 98.0 140.0 10,700Douglas Nov 202.8 99.0 140.0 12,500Douglas Nov 120.0 98.0 136.3 10,100Douglas Nov 76.8 98.0 135.4 9,450Douglas Dec 43.2 97.0 136.3 8,000Douglas Dec 119.5 99.0 140.2 13,515Edgar Jan 80.0 98.0 143.3 9,100Edgar Jan 40.0 99.0 138.5 8,000Edgar Jan 40.0 98.0 138.0 9,000Edgar Jan 12.2 98.0 137.4 7,315Edgar Jan 40.0 99.0 137.0 8,000Edgar Feb 80.0 100.0 143.4 8,250Edgar Feb 40.0 100.0 141.6 7,000Edgar Feb 277.3 99.0 141.0 9,424Edgar Feb 41.0 99.0 139.2 5,944Edgar Apr 40.0 99.0 142.3 8,850Edgar May 39.0 97.0 142.2 8,462Edgar May 60.0 99.0 138.3 8,000Edgar May 35.5 92.0 133.3 8,300Edgar Sep 35.9 98.0 136.7 8,650Edgar Nov 40.0 99.0 143.8 11,000 Edgar Dec 75.0 98.0 141.6 9,778Ford Jan 80.0 100.0 142.4 10,450Ford Feb 46.3 99.0 132.4 11,950Ford Feb 80.0 96.0 133.0 11,950Ford Mar 110.3 100.0 143.1 10,936Ford Mar 50.0 100.0 142.3 10,500Ford Mar 67.0 100.0 143.5 9,982Ford Apr 110.5 96.0 137.7 9,750Ford Jul 152.9 100.0 139.3 11,004Ford Oct 40.0 97.0 137.7 9,700Ford Nov 56.7 100.0 136.0 10,800Iroquois Feb 80.0 94.0 134.4 7,534Iroquois May 89.9 99.0 133.2 11,650Iroquois Aug 80.4 92.0 133.2 6,216Iroquois Aug 91.3 99.0 134.5 11,000Iroquois Sep 75.5 99.0 135.1 11,606Vermilion Jan 19.0 91.0 143.8 5,500Vermilion Jan 117.0 98.0 142.3 9,855Vermilion Feb 78.2 98.0 142.0 10,971Vermilion Mar 60.0 98.0 140.0 7,200Vermilion May 83.0 99.0 141.0 9,250Vermilion Jun 85.0 98.0 137.6 8,069Vermilion Oct 78.9 99.0 142.4 9,873Vermilion Oct 50.0 99.0 143.7 10,000Vermilion Oct 79.9 99.0 143.2 9,850Vermilion Nov 175.5 99.0 143.5 10,252Vermilion Nov 80.0 94.0 138.8 8,713Vermilion Dec 120.0 99.0 143.8 10,863Vermilion Dec 110.5 95.0 143.3 10,313Vermilion Dec 84.0 100.0 144.0 11,119Vermilion Dec 36.0 98.0 143.3 12,600



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Reg

ion 5

Good Productivity Tracts Properties rated as Good Productivity generally sold in the $8,000 to $10,000 per acre price range in 2012. Investors find these types of properties attractive for various reasons. First, there is the anticipation for higher cash returns for their investment dollars. In addition, a larger number of acres can be acquired in their purchase than can generally be acquired with excellent category properties. Many inves-tors and farmers, and a few 1031 exchangers, sought this productivity level because of the limited supply of excellent category farms available this year. Farmers appeared to be the more aggressive buyers for farms in the good category.

However, absentee investors and retired farmers were also active for these good quality farms that were sold. In many

of these sales, buyers appeared to be more reluctant to pay the premiums that were obtained in sales prices being paid for Excellent category land. There was a fairly wide variation in sales prices being reported in the seven various counties of this region. This variation results from mean-ingful differences in the counties and the general makeup of soils within the each county across the region.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcChampaign Feb 40.0 99.0 129.3 7,000Champaign Mar 78.0 99.0 125.2 9,560Champaign May 109.0 90.0 126.3 8,531Champaign Jun 40.0 91.0 125.4 9,000Champaign Oct 340.0 93.0 122.6 8,319Champaign Dec 104.2 99.0 123.3 9,550Coles Feb 52.7 85.0 127.7 6,100Coles Mar 92.88 95.0 119.5 5,000Coles Apr 40.0 100.0 121.8 9,000Coles Apr 20.0 100.0 117.0 8,600Coles Apr 145.1 990 129.4 8,494Coles Apr 111.6 990 131.4 9,600Coles Apr 43.3 94.0 119.6 6,600Coles Apr 33.8 89.0 117.1 3,845Coles Jun 47.0 100.0 118.0 7,505Coles Jul 20.0 99.0 122.0 4,900Coles Oct 164.2 95.0 127.6 9,592Douglas Feb 77.8 96.0 129.1 9,254Douglas Mar 80.6 96.0 129.5 9,000Douglas Mar 40.0 94.0 131.3 9,500Douglas Apr 33.0 100.0 120.8 5,843Douglas Apr 74.8 92.0 132.8 10,127Douglas May 38.0 99.0 131.3 9,481


Doulgas Aug 39.9 89.0 131.1 9,216Edgar Jan 12.8 99.0 129.7 6,983Edgar Jan 12.2 99.0 131.4 7,312Edgar Jan 113.0 93.0 124.7 5,800Edgar Jan 96.9 830 119.0 3,250Edgar Feb 164.7 74.0 129.8 6,075Edgar Mar 50.2 96.0 131.5 7,900Edgar Apr 36.7 91.0 120.3 4,675Edgar May 36.7 90.0 122.9 4,675Edgar Aug 29.5 99.0 122.6 6,300Edgar Oct 86.5 56.0 122.7 5,597Ford Jan 79.6 100.0 120.0 8,166Ford Jan 160.0 99.0 122.4 7,800Ford Jan 120.0 92.0 126.1 8,500Ford Jan 189.3 97.0 119.4 7,300Ford Feb 80.0 99.0 130.8 9,800Ford Mar 69.5 99.0 130.8 9,400Ford Mar 66.5 96.0 130.4 12,700 Ford Apr 79.4 99.0 124.7 7,600Ford May 74.5 99.0 130.0 8,323Ford May 148.3 99.0 117.2 8,898Ford Jun 76.9 99.0 126.7 9,500Ford Jul 79.2 99.0 123.3 8,950Ford Jul 76.9 100.0 121.2 8,850Ford Aug 80.0 99.0 121.0 8,300Ford Aug 80.0 97.0 123.4 9,200Ford Aug 80.0 100.0 119.8 8,200Ford Oct 80.0 99.0 117.5 6,500Ford Oct 159.5 99.0 121.2 8,975Ford Oct 74.4 990 122.2 6,721Ford Nov 160.0 95.0 117.1 7,950Ford Nov 120.0 94.0 120.0 7,900Iroquois Jan 367.2 96.0 120.0 6,700

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Recapitalization

Iroquois Jan 24.9 96.0 118.4 6,500Iroquois Jan 41.0 97.0 126.9 8,000Iroquois Jan 40.0 96.0 124.4 7,500Iroquois Feb 30.0 97.0 118.6 7,520Iroquois Feb 10.0 98.0 118.5 8,250Iroquois Feb 40.0 97.0 120.4 9,500Iroquois Feb 75.9 98.0 119.7 7,800Iroquois Feb 100.0 98.0 126.0 5,500Iroquois Feb 47.0 90.0 119.3 7,293Iroquois Feb 80.0 94.0 132.3 7,500Iroquois Feb 60.2 97.0 132.0 9,136Iroquois Mar 150.6 98.0 120.8 7,198Iroquois Mar 99.3 98.0 126.2 8,104Iroquois Mar 40.0 97.0 128.3 6,200Iroquois Apr 10.0 94.0 121.7 7,500Iroquois Apr 79.0 97.0 123.1 9,195Iroquois Apr 140.0 96.0 124.6 8,969Iroquois May 36.0 97.0 120.7 8,725Iroquois May 25.0 99.0 122.4 8,200Iroquois Jun 27.0 97.0 128.7 8,000Iroquois Jun 80.0 98.0 125.2 10,333Iroquois Jul 40.0 95.0 127.3 7,000Iroquois Jul 196.0 99.0 122.3 8,112Iroquois Jul 68.0 97.0 126.9 10,441Iroquois Jul 35.6 99.0 126.2 7,876Iroquois Jul 36.9 99.0 126.3 7,588Iroquois Jul 41.0 99.0 127.5 9,463Iroquois Jul 115.8 99.0 129.0 8,985Iroquois Aug 75.2 97.0 121.0 7,899Iroquois Aug 21.4 98.0 131.1 8,346Iroquois Sep 37.6 96.0 128.4 8,600Iroquois Sep 105.5 98.0 123.6 7,500Iroquois Sep 128.4 93.6 127.3 9,450


Reg

ion 5

Iroquois Sep 286.4 98.0 127.5 9,602Iroquois Sep 156.0 98.0 127.9 9,725Iroquois Sep 78.8 96.0 127.0 8,600Iroquois Sep 80.4 98.0 123.0 7,796Iroquois Sep 80.0 99.0 124.8 8,135Iroquois Sep 40.0 98.0 128.2 10,178Iroquois Sep 50.4 94.0 136.0 11,733Iroquois Sep 134.5 90.0 126.7 7,100Iroquois Sep 55.0 98.0 118.3 8,250Iroquois Oct 160.0 97.0 122.9 7,725Iroquois Oct 57.2 97.0 127.6 8,800Iroquois Oct 51.9 99.0 126.4 8,955Iroquois Nov 76.9 93.0 126.1 8,450Iroquois Nov 42.8 96.0 126.4 8,926Iroquois Nov 67.1 97.0 126.5 7,706Iroquois Nov 650 97.0 127.6 10,134Iroquois Nov 77.0 99.0 130.7 10,390Iroquois Nov 40.0 97.0 131.2 12,200Iroquois Nov 33.7 96.0 131.7 8,449Iroquois Dec 121.3 92.0 126.0 9,400Vermilion Jan 126.0 81.0 126.4 6,548Vermilion Jan 24.9 96.0 118.4 6,500Vermilion Jan 42.9 98.0 122.8 6,500Vermilion Jan 80.0 99.0 128.0 9,800Vermilion Feb 181.0 91.0 123.0 7,200Vermilion Apr 81.6 95.0 123.8 8,958Vermilion Apr 76.7 95.0 124.4 8,001Vermilion Apr 168.5 94.0 125.2 8,309Vermilion May 99.0 93.0 124.0 6,465Vermilion May 151.5 98.0 127.8 8,000Vermilion May 80.0 97.0 132.3 8,800Vermilion Oct 20.0 53.0 121.2 6,250Vermilion Oct 112.4 96.0 127.0 8,774

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Average Productivity TractsSales prices of farms rated as Average quality productiv-ity generally ranged from $6,000 to $8,500 per acre. Most of these sales occurred in the outlying areas of the region. Buyers for these properties were more likely to be neigh-boring farmers and retired farmers. However, because of the limited availability of the top-quality farms and the price ranges paid in the higher quality land categories, investors and buyers were active in this category as well in 2012. As the availability of top-quality properties de-creases, the activity in all of the other categories increases. There was a strong supply of these average quality catego-ry properties sold in 2012. The prices paid in this average quality sales category showed a higher percentage increase than the increases reported in either of the Excellent or Good quality categories of sales prices.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcChampaign Apr 88.5 99.0 116.6 7,076Champaign Dec 80.0 89.0 112.9 6,000Coles Feb 80.0 69.0 111.4 4,000Coles Mar 192.7 97.0 116.2 4,200Edgar Jan 27.0 52.0 110.6 3,200Edgar Jan 160.0 68.0 113.5 5,000Edgar Mar 237.2 48.0 115.9 3,200Edgar Apr 68.3 39.0 109.4 4,649Edgar Aug 14.2 49.0 103.8 3,400Edgar Sep 62.8 57.0 113.8 3,822Edgar Nov 173.4 43.0 110.6 2,850


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Edgar Nov 124.7 54.0 108.3 3,050Edgar Nov 43.5 49.0 106.6 3,750Ford Mar 70.2 97.0 108.1 7,800Ford Aug 80.0 96.0 109.2 6,250Ford Oct 36.7 97.0 116.1 8,000Ford Nov 159.4 95.0 108.4 6,550Ford Nov 159.4 99.0 108.4 8,300Ford Nov 153.4 93.0 109.1 6,800Iroquois Jan 80.0 99.0 114.4 8,079Iroquois Feb 60.0 98.0 109.9 5,500Iroquois Feb 40.0 92.0 113.7 6,000Iroquois Feb 20.0 95.0 116.5 6,750Iroquois Feb 76.0 99.0 100.5 6,188Iroquois Apr 26.0 99.0 105.6 6,000Iroquois Apr 33.0 91.0 111.1 6,818Iroquois Apr 39.2 93.0 116.2 5,000Iroquois Jun 240.0 97.0 106.6 5,125Iroquois Jul 95.0 76.0 113.1 4,263Iroquois Jul 63.0 98.0 106.5 7,381Iroquois Sep 30.5 95.0 113.4 8,250Iroquois Sep 40.0 98.0 114.0 8,200Iroquois Oct 157.0 96.0 108.6 6,900Iroquois Oct 80.0 96.0 114.4 8,000Vermilion Jan 40.0 57.0 108.3 5,050Vermilion Jan 32.4 93.0 109.4 5,850Vermilion Jan 41.6 96.0 116.6 7,300Vermilion Jan 29.6 91.0 103.0 6,428Vermilion Jan 75.0 100.0 110.0 4,133Vermilion Jan 40.0 57.0 105.7 5,050Vermilion Jan 80.0 82.0 114.7 5,125Vermilion Feb 29.5 97.0 111.6 5,600Vermilion Jun 99.0 37.0 103.9 4,545Vermilion Jun 24.0 98.0 105.7 5,551Vermilion Sep 60.0 92.0 115.1 7,600

Fair Productivity Tracts

There were only a few sales reported for farms in Region 5 in the Fair category since there is very little land of this quality located in this region. However, this category did have the largest percentage increases of sale prices paid of all categories reported in this region in 2012. The higher priced farmland in all the other categories appears to have had a very positive affect on the price buyers were will-ing to pay for the fair category properties. When land of this quality is combined with trees and rougher land, these tracts become more popular with buyers looking for tracts for recreational, residential, or other non-farming uses. However, it is difficult to analyze data for all of region 5, when there were so few sales reported in this category.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcIroquois Mar 38.4 98.0 95.0 5,000Iroquois Jul 85.0 89.0 97.0 7,059Vermilion Mar 55.1 75.0 72.4 6,000

Recreational TractsDemand for recreational properties (woodland, ponds, creeks/rivers, rolling topography, etc.) continued to be slow in 2012 because of the poor economy and the lack of discretionary income. When funds are tighter, people don’t have the excess funds available for these types of proper-


Reg

ion 5








ties. There were only a couple of re-ported recreational sales in Region 5 in 2012. The general supply of this type of property is low in this region, because most of the acreage is in production land, producing corn and soybeans. These tracts are found in the more remote areas of Region 5, so it makes it difficult to analyze the market for these types of properties. Prices can vary greatly depending on the motivations and knowledge of buyers and sellers. Emotional reasons, rather than strictly earnings or production reasons, coupled with a buyer’s financial position and his motivation, create the varied prices paid in the marketplace.

The declining economy was still the major factor in reducing the demand for these kinds of properties. There is still cash in our economy, but buyers of recreational land make purchases for these types of proper-ties with excess funds. Buyers were just not as aggressively seeking vacation properties and hunting properties because of economic uncertainties. For many of these buyers, dis-cretionary cash positions have not improved adequately in the last two or three years. While the desire to purchase this category of properties is still there, economic factors have taken many of these buyers out of the market at this time. However, prices for sales in these categories have remained steady in 2012 in the $3,500 to $4,500 per acre price range. However, prices do still vary dramatically in these sales for such factors as location, scenic features, access, and the potential buyer’s discretionary funds available to make this kind of purchase.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcColes Jul 80.0 55.0 124.0 3,600Coles Oct 23.0 48.0 132.0 3,043Coles Dec 13.0 31.0 124.0 5,100Douglas Oct 27.0 22.0 130.0 3,300Vermilion Mar 37.0 0.0 0.0 3,568Vermilion Mar 31.9 16.6 100.0 4,227

Transitional TractsThe overall demand for transitional land was not strong in 2012. The term “transitional land” is used to describe land that is located in an area that could have development po-tential in the next 5 to 15 years. Most of this land is in the outlying areas of Champaign-Urbana and Danville, or in a smaller radius around some of the less-populated cities in the region. This type of land will sell for a premium over the general farmland market. However, there were no tran-sitional land sales recorded by this group in 2012. There wasn’t much activity in transitional properties during this time period because of the economy and the poor business climate in general.


Dean Kyburz – ChairBusey Ag Services, Decatur, IL

Dale Aupperle, AFM, ARAHeartland Ag Group, LTD, Forsyth, IL

Brent Bidner, AFMHertz Farm Management, Monticello, IL

James Flanigan, AFMSoy Capital Ag Services, Decatur, IL

Bruce Huber, AFM, ARAHickory Point Bank Ag Services, Decatur, IL

Thomas Wargel, AFMBlack Prairie Ag Services, Clinton, IL

The market for excellent quality farmland increased approximately $2,000 during 2012. This increase represents a gain of over 20 percent from the 2011

value. Values increased significantly during the last third of the year, and continued very strong at years end.

Although the value for excellent quality farmland in-creased significantly, the demand was not as strong in the good, average, and fair categories, and showed a slightly lower increase. It was very difficult to measure, but it also appears as though recreational land also was beginning to show some strength at the end of the year. Many of the transitional tracts reviewed were also excellent quality tracts, and it was difficult to determine the increase, due to the locational value over and above the basic land price. There did, however, appear to be a slight increase in 2011.

Region Six consists of seven counties located in Central Illinois. Macon County is in the center of the area, and is surrounded by Logan, DeWitt, Moultrie, Shelby, Piatt, and Christian Counties. These counties have predominantly excellent soils, a large agricultural support network, and a high level of interest from the non-agricultural sectors. The following are some observations from 2012:• The drought of 2012 made for a very challenging years in most, if not all, of the area. It not only was one of the worst droughts in history, but was accompanied by extreme heat. • Corn yields were low and extremely variable. Bean yields were also down significantly, although they were benefited greatly by late summer rains.• Net farm income did not suffer as much as might have been anticipated. The effects of the lower yields and

Region 6 - Central



Exc. Productivity $9,000-$15,000 20-25% Up $325-$475 0-10% $375-$450Good Productivity $7,000-$10,000 15-25% Up $275-$425 0-10% $325-$400Avg. Productivity $6,000-$8,000 15-25% Up $225-$375 0-10% $250-$350Fair Productivity $5,000-$7,500 15-20% Up Recreational Land $2,500-$5,000 5-15% Up Transitional Tracts $9,000-$20,000 0-10% Up


Reg

ion 6

drought were offset to a great extent by higher commodity prices and crop insurance payments.• There was a tremendous amount of land on the market, and many sales in the area.• The demand was, however, very strong, and in spite of the number of farms on the market values seemed to increase.• Many of the sales were prompted by the anticipation of the change in the tax laws as we approached the “fiscal cliff.• There were few 1031-Exchanges, but it is still a factor in the market in some instances. • Return on investment, in comparison to other options, remains very strong for farmland.• Auction seemed to demand a premium over private sales throughout most of 2012.• There were a good mix of buyers in the market, but the majority of the sales in the area appear to be negotiated by farmers.

Excellent Productivity TractsOur committee collected 79 sales in the Excellent category. The prices ranged from $6,658 per tillable acre to over $16,000 per tillable acre. The average price for tillable acre was $11,812. This level compares to an average price in 2011 of $10,569 per tillable acre. The increase indicated is 17.66 percent for the year. The average weighted produc-

tivity index was 138.7 and the sale price per productivity point average is $85.16 in 2012 compared to $73.16 in 2011. This would indicate an increase of 16.4 percent. The increases shown are for the year-over-year averages. The committee feels, however, a farm in the Excellent category that would have sold for $10,500 per acre in 2011, would have sold for $12,750 per acre at the end of 2012 or an increase of 21.4 percent.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMoultrie Jan 39.6 100.0 134.5 10,900Macon Jan 64.8 98.0 137.3 9,500Piatt Jan 80.0 98.8 139.8 10,700Macon Jan 388.0 99.7 141.5 9,700Macon Feb 58.9 98.0 141.7 13,311Macon Feb 39.0 94.0 134.3 10,404Christian Feb 80.0 96.6 134.8 9,000Macon Mar 80.0 100.0 139.9 11,250Macon Mar 10.0 100.0 143.4 9,384Macon Mar 45.5 96.7 143.2 9,690Macon Mar 39.0 92.0 133.7 10,404Moultrie Mar 70+- 100.0 139.5 10,700Christian Mar 42.9 98.2 133.3 11,600Christian Mar 45.0 100.7 133.5 13,700Christian Mar 80.0 97.0 133.7 11,500Christian Mar 80.0 100.0 133.0 11,400Piatt Apr 75.0 100.0 141.2 11,000Christian Apr 83.3 100.0 134.8 12,450Christian Apr 77.2 100.0 133.0 12,050Christian Apr 239.3 100.0 133.7 12,700Moultrie Apr 160.7 100.0 139.0 12,496Logan Apr 74.5 100.7 142.3 11,450

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DeWitt May 328.5 97.4 140.0 10,900Logan May 74.5 100.0 142.2 11,503Macon May 69.4 100.0 142.2 10,493Logan Jun 54.7 96.3 139.9 10,000Macon Jun 160.0 88.4 141.3 9,850Macon Jun 37.9 100.0 141.3 12,000Logan Jun 225.0 97.3 141.2 12,150Christian Jun 81.2 99.0 134.2 11,100Christian Jun 42.9 100.0 133.3 11,603Christian Jun 45.0 100.0 133.5 13,919Macon Jul 80.0 100.0 137.6 12,250Shelby Jul 75.8 100.0 138.6 6,658Macon Jul 40.1 98.6 135.5 9,975Christian Jul 92.7 89.9 133.2 9,500Christian Jul 92.7 89.8 133.4 9,500Christian Aug 162.9 97.3 133.1 15,600Dewitt Aug 40.0 100.3 139.9 11,700Macon Aug 57.9 103.2 141.7 12,600Moultrie Sep 79.2 100.4 139.8 12,100Moultrie Sep 67.9 100.1 140.3 11,600DeWitt Oct 364.0 98.6 140.0 11,044Shelby Oct 59.0 95.9 144.0 11,250Christian Oct 81.6 100.5 133.0 13,000Dewitt Oct 44.0 98.0 142.5 10,960Dewitt Oct 75.0 93.2 141.5 10,950Dewitt Oct 89.0 96.9 139.6 10,953Dewitt Oct 80.0 96.4 142.0 10,953Dewitt Oct 120.0 99.0 138.3 10,953Dewitt Oct 60.0 91.8 141.3 10,960Dewitt Oct 80.0 99.3 137.6 10,750Dewitt Oct 80.0 99.6 140.1 10,125Dewitt Oct 77.0 102.1 139.4 9,870Moultrie Oct 158.0 98.0 139.1 12,000Dewitt Oct 80.0 98.4 137.1 9,562

Macon Oct 158.0 95.4 140.5 11,400Christian Nov 80.0 95.8 135.0 14,400Christian Nov 81.6 100.0 133.0 13,000Christian Nov 124.4 99.1 138.1 12,400DeWitt Nov 157.5 96.5 138.8 10,600Macon Nov 80.0 99.6 139.5 12,750Macon Nov 60.0 98.2 141.0 11,750Piatt Nov 81.3 98.1 138.3 12,250Piatt Nov 227.5 98.1 139.2 11,550Macon Nov 71.3 89.1 140.2 12,250Macon Nov 23.9 96.3 144.0 13,000Christian Nov 80.5 98.9 142.3 14,000Piatt Nov 160.0 98.4 141.0 13,000Macon Nov 123.2 99.6 137.7 14,400Macon Nov 80.0 100.0 140.7 12,000DeWitt Dec 101.1 96.9 140.9 12,600DeWitt Dec 69.4 96.3 141.7 12,900Logan Dec 114.7 100.0 142.5 11,350Shelby Dec 115.6 99.6 144.0 13,150Dewitt Dec 129.6 97.1 137.2 13,900Piatt Nov 160.0 97.8 139.0 11,550Piatt Nov 236.0 100.0 139.9 12,074

Good Productivity TractsThe committee cited 20 sales in the Good category. These sales ranged from $6,503 per acre to $13,260 per tillable acre. These sales were an average of 92.9 percent tillable and had an average weighted productivity index of 127.64. The sale price per tillable acre averaged $10,113, or $79.31 per PI. The value indicated in this category in 2011 was $8,089 per acre, indicating an increase of 25 percent.

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The average price per acre of $7,482 per acre would indicate an increase of 23.7 percent increase over and above the av-erage price of $6,049 per acre, reported in the area on 2010. Although there is a large range in the size of the sales report-ed in this category, as well as the quality of the land sold, it is our opinion that the values for the sales in this category would indicate approximately a 24 percent increase. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcChristian Apr 80.4 100.0 132.0 12,300Christian Apr 80.0 100.0 129.6 12,050Christian Apr 80.0 97.8 132.1 12,050Christian Apr 80.0 97.1 128.3 10,400Christian Apr 119.9 84.5 120.3 8,600Christian Aug 77.5 100.0 124.8 9,900Shelby Aug 76.0 100.0 117.5 8,500Christian Mar 78.4 78.7 119.0 6,000Moultrie Aug 462.0 91.6 132.5 9,162Christian Aug 77.5 101.7 125.0 9,900Christian Aug 222.0 93.8 126.8 7,700Dewitt Nov 166.1 82.3 120* 7,295Christian Nov 80.0 97.5 123.2 8,900Christian Nov 96.0 89.5 131.4 11,200Macon Nov 81.3 100.0 121.2 13,260Christian Nov 46.0 88.5 122.5 10,600Shelby Nov 30.0 98.7 132.5 11,600DeWitt Aug 63.5 97.1 128.3 9,400Piatt Jan 40.0 98.0 132.0 9,000Piatt Apr 34.1 94.7 127.9 6,158

Average ProductivityThe committee cited 5 sales in the Average Productivity cat-egory. They were an average of 97.8 percent tillable with an

average PI of 111.11. The sales ranged from a price of $7,903 per tillable acre to $9,750 per tillable acre. The average sale price per productivity unit was $80.43. The average sale price per tillable acre of $8,936 was nearly 35 percent over the value indicated in 2011 of $6,634. The committee feels that the value indicated in 2011 was likely too low, as there were very few sales found. It is our estimate that the values in the average category increased 15 to 20 percent in 2012.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcShelby Jan 58.7 91.4 115.3 8,500Christian Jul 63.7 98.5 110.7 7,903Shelby Nov 80.0 98.5 108.0 9,750Shelby Jan 40.7 100.0 103.3 8,884Shelby Aug 76.0 100.0 117.3 8,500

Fair ProductivityThe committee identified four representative sales in the Fair category. The sale price per tillable acre ranged from $5,994 to $7,481. The tracts cited were an average of 97.6 percent tillable with an average productivity index of 97.67. The average value indicated in this category in 2011 was $5,793 per acre. The 2012 indicated value of $6,873.23 per acre would indicate an increase of 18.65 percent. The sales price per productivity unit also in-creased over 18 percent.



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Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcShelby Apr 40.6 100.0 94.7 5,994Shelby Oct 75.0 100.0 98.0 7,000Shelby Oct 60.0 91.3 98.1 6,833Shelby Feb 40.0 99.8 99.9 7,000

Recreational Tracts The committee cited 8 sales in the Recreational category. The prices range from $2,150 per acre to $4,479 per acre. The tracts ranged in size from 11.79 to 118 acres. The average sales price of $3,567 per acre would indicate an increase of approximately 15 percent over the $3,101 figure shown for 2011. The committee feels that this is an accurate representation of the change in value for the Recreational category. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcChristian Jan 11.8 3,000Christian Feb 24.1 3,000Christian Jan 118.0 2,150DeWitt May 55.8 4,479Logan Oct 79.0 4,051Macon Nov 40.0 3,438Shelby Nov 40.0 4,300Shelby Jul 34.0 4,118

Transitional CategoryThere were nine sales cited in the Transitional category ranging in size from 23.88 acres to 158 acres. The sales were an average of 94.08 percent tillable and had an


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average weighted productivity index of 136.4. The average sale price per tillable acre indicated was $13,687. The average sale price in this category in 2011 was $10,000. There were, however, very few sales available for com-parison. The increase indicated would be over 30 percent. We should keep in mind, however, that these sales would also qualify in the Excellent category and the increase in value indicated in that category was 15 to 25 percent. Although it is difficult to isolate, it would seem that there is some increase in demand for Transition-al land, and the increase may be between 0 and 10 percent above the 2011 values. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMacon Nov 158.0 95.4 140.5 11,400Macon Dec 63.8 97.9 140.6 13,000Macon Nov 71.3 89.1 140.2 12,250Macon Nov 23.9 91.7 144.0 13,050Macon Oct 41.0 97.6 127.7 19,500Macon Jun 140.6 83.9 128.5 9,674Macon Mar 58.9 98.2 141.6 13,311Christian Mar 49.3 100.0 134.9 14,600Logan Feb 46.7 92.9 129.7 9,574

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Reg

ion 7

Tom Toohill – ChairSoy Capital Ag Services, Springfield, IL

Ernest Moody, CAC, AFM, ARAHeartland Ag Group, Springfield, IL

Allan Worrell, AFMWorrell-Leka & Associates Land Services, Jacksonville, IL

Joshua YoungLand Resource Group, LLC, Carlinville, IL

Due to the diversity in soil productivity, agricultural land sale prices vary widely in the West Central Area, designated Region Seven. Here, there are

significant changes in soils from north to south by virtue of ancient glacier movements and from east to west due, in large part, to the influences of the Illinois, Mississippi and Sangamon Rivers. The broad, mostly level prairies are mostly Tama, Ipava and Sables soils north of the Moraine line and Virden, Herrick and Harrison soils south of the line. The rolling areas formed under upland hard wood timber are mostly Fayette, Rozetta, and Keomah soils. Adjacent to the rivers and streams are bottomlands fre-quently including Sawmill, Wakeland and Beaucoup soils. The steepest, usually timbered hillside, are frequently Hickory and Fishhook soils. There are several areas of

sand outcroppings, particularly in northern Menard and Cass Counties adjacent to the Sangamon River. Calhoun County lies farthest southwest of the Region 7 counties, and is bordered by the Illinois River on the east side and the Mississippi River on the west. These rivers influence weather pattern sufficiently to allow successful peach and plum orchard production. Sales indicate the top three categories of farmland in-creased by 15 percent to 20 percent in 2012 in the Re-gion. The lesser quality sales prices were steady. The overwhelming amount of the increased occurred on sales negotiated in the fall. Similar to 2011, we note a substan-tial number of sales of tracts in the Good to Average Pro-ductivity classification. These sales occurred mainly in the

Region 7 - West Central


% Change Change in rate of land Ave. Cash Rent/Ac. Total in /Acre turnover (up, steady, Ave. Cash Rent % Change on recentlyFarm Classification Value/Acre from 2011 down) and % Per Acre from 2011 negotiated leases Exc. Productivity $10,500-$13,000 Up 15-20% Steady $350-$450 Steady Good Productivity $9,000-$12,000 Up 15-20% Steady $200-$300 Steady Avg.Productivity $3,500-$6,000 Up 15-20% Steady $100-$200Fair Productivity $2,800-$4,000 Steady Steady $75-$100Recreational Land $2,200-$3,200 Steady Steady Transitional Tracts $9,000-$11,000 Steady Steady


southern counties of Montgomery and Macoupin. Overall, the total number of land sales was steady in 2012. High commodity prices supporting crop revenue and rents combined with low interest rates continue to drive farmland values higher. The uncertainty of the effect of the drought was clearly settled following the first few fall auctions of land. Farmland values in Region 7 continued to show strength throughout 2012, and the strength acceler-ated in late summer and fall seasons Following an unusually warm and dry winter, corn was being planted in central Illinois during March. Following four very wet springs in a row, it appeared we were off to an excellent production year. As the corn crop rating im-proved, fall 2012 corn prices fell below $5.00 per bushel. By mid-June, it became apparent we were in a drought. By mid-July fall corn prices had increased by $3.00 per bushel with a sales price of over $8.00 per bushel. By summer’s end, the year was considered the worse drought since the 1950s. Most of the Midwest and Plains states are still in a moderate-to-severe drought. East of the Illinois River our soil moisture levels are considered “normal”. Drainage tiles are still not running. River and creek levels are very low. We are in much better shape than most, but still lack-ing in soil moisture. During 2012, corn yield results were in a very wide range. The range was in the single digits to over 200 bushel per acre (under irrigation). Overall, on the better land, 120

bushel per acre averages were common. We received some early September rains as remnants of Hurricane Isaac. This late but timely rain kept 2012 soybean yields near aver-age on the better land. Yields suffered tremendously on the lesser quality land and where the drought was the most severe. The drought pattern continued into the fall allowing for a rapid harvest in our area. Good weather conditions allowed completion of fall tillage and fertilizer applications. The winter has been colder than last year, but has not resulted in the addition of much moisture to soils in the region. Cash grain prices were near $7.00 per bushel for corn and $14.00 per bushel for soybeans. Grain prices peaked early during harvest then dropped and have recently recovered some in January. Our export market for corn has been re-duced due to the high prices. Projected stocks of both corn and soybeans are near all-time lows. Fertilizer and seed prices for the 2013 crop are up some compared to 2012. In late January, Fall 2013 cash bids are around $5.50 per bushel for corn and $13.00 per bushel for soybeans.

Excellent Productivity TractsThis land, generally described as flat, black and square, continues to be in great demand in our region. The prin-ciple buyers have been operating farmers and investors with close to ties to aggressive operating farmers. Similar


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Reg

ion 7

to other areas in the state, Region 7 has locations with par-ticularly strong land markets, and other areas where land sales values tend to be less. We have observed this pattern many times over the years as the land market has contin-ued upward. In 2012, it appears even the more conserva-tive areas in the region joined the fall run up in land prices in this category. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMorgan Feb 154.2 100.0 137.6 11,675Sangamon Feb 119.0 97.0 137.0 12,606Jersey Mar 360.0 100.0 143.4 9,301Sangamon Apr 105.0 93.0 137.1 13,200Macoupin Apr 125.4 94.0 138.8 11,104Morgan Apr 152.8 99.0 141.8 11,414Menard Apr 120.0 98.0 142.8 9,082Menard Jul 152.9 94.0 136.5 9,500Sangamon Jul 131.0 97.0 141.9 11,750Sangamon Oct 84.3 96.0 137.4 13,250Menard Oct 154.5 98.0 137.9 13,000Macoupin Nov 135.0 98.0 137.0 13,029

Good Productivity TractsLast year we commented that properties in the Good Pro-ductivity class sold $1,000 to $2,000 less than the Class I farms and that the gap between the two had widened. In 2012, it appears that the gap has stabilized if not even narrowed. Although still bringing very good prices, this type of land is selling at a $1,000 to $2,000 discount to the highest quality land. This class usually has one or more

hazards including: lessor productive soils, unusual shape, varying topography, lack of road frontage, ditches or ponds, cut by roads or railroads or other public utilities. If potential flooding is an element of hazard, the discount is higher. And, because the demand is greater than the avail-ability of Class I land, more buyers seem willing to look at and negotiate purchases of lesser classes of farmland. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMorgan Feb 40.2 97.0 120.1 7,000Montgom. Mar 111.2 98.0 114.1 9,626Greene Apr 182.7 100.0 120.7 8,615Greene Jun 268.4 100.0 115.6 7,994Montgom. Sep 81.2 94.0 128.5 10,200Macoupin Nov 105.0 98.0 123.2 13,700Macoupin Sep 38.6 98.0 130.7 9,281Sangamon Oct 72.3 96.0 130.1 11,500Scott Nov 160.0 99.0 111.3 9,167Morgan Nov 55.0 97.0 121.2 11,200Jersey Nov 120.0 99.0 127.0 10,625Scott Nov 59.8 99.0 131.0 12,900Macoupin Dec 81.2 99.0 129.9 13,275Macoupin Dec 126.0 97.0 123.0 13,400

Average Productivity TractsFarmland classified as Average Productivity included significant variation of farms across the region. Most of the sales in this class occurred in a range from about $4,000 per acre to as much as $8,000 per acre toward year end. The variation is a function of percent tillable and produc-


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tion hazards. Suitability for pasture or recreational use of the non-tillable acres also contributes to the price of a property. Higher prices generally are nearer to metropoli-tan centers, and north of the glacial moraine. It also ap-pears if the productivity rating approaches the low end of the average category, agricultural use prices are extremely discounted. In 2012, in our area, it appears this land spiked in price along with the better land.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcMenard Jan 36.5 89.0 109.2 5,063Montgom. Jan 80.0 98.0 106.2 4,063Morgan May 102.5 92.0 110.1 4,250Montgom. Jul 119.2 98.0 107.3 7,400Montgom. Aug 44.9 95.0 115.2 5,250Macoupin Aug 40.0 95.0 114.3 7,875Calhoun Aug 157.0 88.0 100.7 5,601Jersey Aug 147.0 85.0 110.8 7,687Montgom. Sep 44.9 94.0 103.4 4,250Jersey Sep 59.0 96.0 108.4 8,135Menard Oct 40.0 92.0 113.7 5,825Morgan Oct 160.0 97.0 112.6 6,250Morgan Nov 242.0 87.0 104.7 6,474Calhoun Dec 61.6 99.0 99.6 5,411

Fair Productivity TractsWe found very few sales fitting the Fair Productivity category in our area in 2012. Given the high input costs for seed and fertilizer, and the risk of production, income expectations are very tempered on this quality of land.

Depending on the topography and location, recreational use may help support the value of this type of land more than farming. Although the price increased for this land in 2012, it did not explode in our area.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcScott Jan 35.7 97.0 89.0 2,241Scott Feb 101.4 79.0 102.0 3,800

Recreational TractsSales of average-to-fair land, with a low percentage tillable may be supported by recreational use. We noted many sales of low percent tillable land showing a premium clearly above the tillable portion. This premium may be for pasture land, timber, or recreational uses. We believe that sales values of this type of land have at least held steady and show some recovery from the woes of the Great Recession.

Hunting leases are common in Region 7. These leases are common on both upland and bottom land tracts. Many un-levied or otherwise frequently flooded bottomland farms adjacent to rivers or streams in our area are enrolled in the government long term set aside (CREP) program. These tracts are attractive for hunting depending on the amount of wooded area that compliments the set-aside.



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The government has increased the annual payments per acre on new or renewing contracts for this program to keep in line with farmland rentals. Typically we don’t see much premium added to the value of this type of land due to the government program. Land is a long term investment, and in the long run, who knows if the CREP program is going to be available?

Sale Total percent P / I on TotalCounty Date Acres Tillable Tillable Ac Price/AcCalhoun Oct 68.0 2,171Macoupin Feb 48.0 2,503Montgom. Apr 68.0 2,529Cass Jan 40.0 1,200Cass May 20.0 900Cass Oct 10.0 2,745Morgan Jul 108.0 3,300Greene Mar 50.0 2,850Greene Oct 35.0 3,100Greene Oct 52.0 2,977

Special Interest Stories

We continue to enjoy a premium market for non-GMO corn and soybeans delivered to the Illinois river terminals. The Jim Edgar State Park in Cass County continues to grow in popularity for fishing and other popular outdoor nature activities. Menard County’s “New Salem State Park” and the Lincoln Museum in Springfield attract many visitors.

The commerce commission review of the cross state high transmis-sion line is a concern for many. The Illinois Commerce Commission is also about to review the FutureGen plans for the greenhouse gas storage well in Morgan County. We hear of continued investment in commercial grain handling facilities. Investments in drainage tile have continued de-spite the drought.



Reg

ion 7



General Appraiser

Dale Kellermann Real Estate Broker, AFM,

CCA, State Certified General Appraiser




[email protected] N Water St Decatur, IL 62523217.872.6291

[email protected] S. Lincoln Ave O’Fallon IL, 62269618.622.9490


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Region 7 - Rental Market Conditions Typical Existing Cash Rental Rates for: Avg. Percentages of NEW leases that are: Length Most representative Lowest 1/3 Middle 1/3 Top 1/3 of lease rate on NEW cash lease Flexible Farm Classification by rate by rate by rate contract in area for 2012 Cash cash Share Other

Exc. Productivity 200 300 400 one year 400 50 40 10Good Productivity 150 200 300 one year 300 40 50 10 Avg. Productivity 100 125 200 one year 200 30Fair Productivity 50 75 100 one year 100 30 50 10


Dale Kellermann, AFM, CCA – ChairHickory Point Bank Ag Services, O’Fallon, IL

Bret Cude, AFM, CCAFarmers National Co., Nashville, IL

Daniel A. Davis, AFM, ARA Arch Ag Services, LLC, Columbia, IL

Wayne KellerBuy A Farm Land & Auction Co., Sparta, IL

Matt KrauszMark Krausz Auction Service, New Baden, IL

Shandra McCroyFarm Credit Services of Illinois, Flora, IL

Mark WeberFarm Credit Services of Illinois, Highland, IL

Region 8 in Southwestern Illinois consists of seven counties, four of which border the Mississippi Riv-er. The counties located in Region 8 are Madison,

Bond, St. Clair, Clinton, Washington, Monroe, and Ran-dolph. The city of St. Louis is located across the river from Madison and St. Clair counties. St. Louis has a locational influence on land values in the region due to its large population base and development potential. The western halves of Madison and St. Clair counties are mostly urban-ized and residentially developed. Together Madison and St. Clair counties have over 1/2 million population.

The staggering pace of new residential development that existed in 2008 is now recovering after the bottom of the recession. Nevertheless, the population in the St. Louis

metropolitan area still provides a strong economic engine for the economy of the region and has a positive influence on land values depending on location. With a large popula-tion base within easy driving distance, recreational land has traditionally been in high demand in Region 8. It, too, is now recovering from the recession.

Agricultural land in Region 8 is mostly of average produc-tivity and is mostly used for raising corn, soybeans, and wheat. The eastern side of Region 8 has some scattered small beef operations, but there are many dairies and some large hog operations. Like many other parts of the state, the region experienced a near-perfect spring but hot, dry summer conditions. Wheat yields were near average, while some areas experienced a total loss of the corn crop. Many

Region 8 - Southwest



Exc. Productivity no sales identified $285 15% $285Good Productivity $8,000-$10,500 Flat Steady $230 15% $240Avg. Productivity $7,250-$9,900 16% - 21% Steady to 10% lower $185 12% $200Fair Productivity $5,800-$10,800 25% - 35% Steady to 10% lower $150 15% $170Recreational Land $3,000-$4,000 15% - 50% Steady Transitional Tracts $6,000-$15,500 Flat to 19% None sold to developers Other Sales no sales identified $285 15% $285


Reg

ion 8

fields that did have some corn to harvest also had afla-toxin problems. Later-planted soybeans were able to take advantage of late summer rains and yielded well. Strong grain prices provided good opportunities to sell the grain at harvest. The prices also pushed crop insurance payments higher.

The land market closely followed the growing season. In early 2012, crop prices stabilized and receded some, due to a warm early spring and ideal planting conditions. Contin-ued pressure was felt as the corn and soybeans emerged to beautiful stands. Land sales saw some guarded increases during those months, inching up a percent or so per month. As dry conditions set in, grain prices began their ascent. Some land classes also rose at a faster rate. The biggest jump in land prices came just after harvest when buyers calculated the amount of cash that their 2012 crops and/or insurance payments would provide. While there were few Good tracts available at that time, the Average and Fair categories saw more action. Farmers are more confident that they can raise higher yields on lower quality farms by using newer technologies and genetics. On the north end of the region, higher quality/higher priced land in central Illinois pushed values up in Madison County.

The outlook for agriculture is still very positive, and farm-ers and investors have been buying more land and/or have been installing tile. Interest rates remain low, and there are few attractive alternate investments available to compete

with the market rate of return on farmland. There has been more demand than supply of farmland available. Demand for recreational ground is improving, while transitional land remains weak due to the lack of residential and com-mercial development.

Good Productivity TractsRegion 8 has very few areas with soils at 133 and above, and no representative sales in the Excellent category were noted in 2012. There are spotted areas of Good Productivity soil types intermingled among Average Productivity soil types in the northern and eastern portion of Madison County, the eastern portion of St. Clair County, and the western parts of Clinton, Bond, and Washington Counties in Region 8. Sale prices in 2012 for the Good Productivity tracts in Region 8 generally ranged from about $8,000/acre to $10,045/acre (Sale #1 sat on both sides of Interstate 255, yet connected by an underpass, and had “Occasionally Flooded” soil types). This range is actually very similar to 2011.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcSt. Clair May 44.8 100.0 126.0 7,700St. Clair May 21.2 99.0 120.0 8,000Madison Jul 94.5 97.0 121.0 8,932Madison May 179.3 94.0 122.0 9,480St. Clair Dec 106.4 92.0 123.0 10,045


operation?




Dale Kellermann Real Estate Broker, AFM, CCA, State Certified General Appraiser

• RealEstateBrokerage• Auctions• FarmManagement• Appraisals• Consulting

[email protected]

1400 S Lincoln Ave | Suite G | O’Fallon, IL 62269

618.622.9490

EXPERIENCEDPROFESSIONALS

CUSTOMIZED AGRICULTURE SERVICES



Average Productivity TractsMost of the Region 8 area is comprised of Average Produc-tivity soil types. The Average Productivity soils types tend to be generally level-to-undulating with mostly rectangular shaped fields, but may also have some crossable waterways or ditches associated with them. Values jumped in 2012 and ranged primarily from $7,250 to $9,900 per acre. As with Good Productivity tracts, values increased signifi-cantly as 2012 progressed. Madison County saw increases as much as 20 percent; Randolph County upland soils rose 9 to 10 percent; Washington County jumped 15 to 17 per-cent; and bottomland soils were also up 15 ti 17 percent. Sale #2 in Monroe County was bottomland. Sale #3’s higher price reflects the higher price for upland ground. Sales 5 and 6 show the negative effect of a lower percent-age of tillable acres on the sale price per acre. Madison and Bond Counties felt the effect of higher prices pushing in from the north, while Bond and Clinton Counties also had aggressive bidders for use in dairy farms.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcRandolph Nov 203.0 75.0 108.0 5,369Monroe Aug 155.0 96.0 111.0 5,600Monroe Jan 112.8 91.0 100.0 6,500Randolph Oct 80.0 88.0 103.0 7,000Washing. Mar 20.0 97.0 114.0 7,250St. Clair Nov 26.1 71.0 114.0 7,250Randolph Jun 115.0 99.0 105.0 7,282Monroe Nov 113.8 88.0 116.0 7,472Bond Jan 151.0 88.0 106.0 7,613Madison Mar 33.9 97.0 102.0 7,800Washing. Dec 80.0 99.0 104.0 8,000St. Clair Dec 26.0 97.0 106.0 8,056Madison Apr 38.0 90.0 105.0 8,289Bond Dec 179.5 93.0 106.0 8,500Clinton Jan 80.0 94.0 101.0 8,625Clinton Aug 48.0 97.0 101.0 9,375Bond Oct 83.0 96.0 114.0 9,925Madison Nov 48.2 100.0 114.0 11,796

Fair Productivity TractFair Productivity tracts tend to be located in the more roll-ing areas of Region 8 and are usually rolling or sloping timber soils with erosion control challenges. Often fields are irregularly shaped with a certain amount of non-tillable woods or waste. There may be some creek bottom soils associated with these farms at the base of the rolling hills or steep slopes. These types of farms generally require ad-ditional inputs of time, labor, and management, and can be more inefficient to farm with large modern machinery.

The fair productivity tracts are more prevalent toward the southern and eastern portions of Region 8 and tend to be located near major creeks and streams where the topogra-phy slopes off toward the creek bottoms.

In spite of their negative attributes, some areas of Region 8 saw a surge in values. Sales #1, #3, and #4 were earlier, prior to the run-up later in the year. Sale #2 occurred in eastern Clinton County; this area has probably been, his-torically, the least competitive.

The big jump can be seen in the last four sales. The October sale was in northern Clinton County. The last three sales were a farm that was auctioned in December. These could have been classified as Average tracts: They are creek bot-tom tracts whose initial soil PI’s are in the 120’s. However, they are also classified as “Occasionally Flooded” or “Fre-quently Flooded”, and the discounts drop their PI’s. There are several very large grain, hog, and/or dairy farmers in that area.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcBond Mar 127.5 86.0 90.0 5,803Clinton Aug 34.6 96.0 93.0 6,069St. Clair May 34.9 86.0 95.0 6,825Washing. Mar 40.0 99.0 99.0 7,800Clinton Oct 40.0 100.0 94.0 10,814Clinton Dec 41.2 100.0 95.0 15,898Clinton Dec 84.9 99.0 93.0 16,784Clinton Dec 17.3 95.0 96.0 17,341

Recreational TractsRecreational Tracts in Region 8 are usually either com-pletely or mostly wooded. If there are tillable fields, they tend to be small and oddly shaped making them difficult








Reg

ion 8

Region 8 Land Values Summary Chart: 2001-2012to farm efficiently. There is usually little or no agricultural income associated with these tracts. Usually, the buyers of these recreational properties are non-farmers and hunters looking for the recreational opportunities, rather than agricultural pro-duction of the tract.

There is a good demand for Recreational Tracts in Region 8 due to the large popula-tion base around St. Louis. Most of Region 8 is within an hour’s drive of St. Louis, making it convenient to utilize a recre-ational property. Most Recreational Tracts tend to be toward the southern and eastern portions of Region 8 away from the more heavily developed and urbanized areas in the northwest part of Region 8. The Kas-kaskia River flows through the eastern and southern portions of Region 8 and much of the wooded area in the Region follows along the Kaskaskia and its tributaries. Demand for recreational tracts in Region 8 fell significantly when the economic recession began.

During 2012 some recovery was experienced with base values increasing to approximately $3,000 per acre (an in-crease of 50 percent), and higher values increasing around 15 percent to $4,000 per acre. The low sale was for a very rough, “Pre-Law” strip-mined parcel. The second sale was a land-locked piece purchased by an adjoining landowner.

Sale #3 was a wet floodplain with little additional value placed on the farmland, versus Sale #8 whose cropland (former CRP) was more valuable. The higher sales in Madison County show more of a metropolitan influence.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcRandolph Aug 185.0 1,951St. Clair Sep 20.0 2,300Monroe Feb 109.7 53.0 104.0 2,980Bond Dec 60.0 6.0 3,073St. Clair Apr 39.6 27.0 3,360Randolph Sep 36.7 3,542Washing. Apr 40.0 3,600Randolph Apr 175.8 63.0 112.0 3,942Bond Dec 37.5 4,000Madison Apr 32.3 7.0 4,048Madison Apr 34.7 11.0 5,903

Transitional TractsThe sales in St. Clair, Clinton, and Bond Counties were very close to, or adjoined towns. However, these sales are listed to show that their values do not reflect much, if any, added value due to their location. Prior to 2008, farms adjoining large cities (O’Fallon, Belleville, Edwardsville) were selling for $25,000 - $40,000 per acre. And farms ad-joining the smaller collar towns were around $15,000 per acre. The only areas in 2012 showing some future develop-ment values were primarily in Monroe County.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcSt. Clair Dec 75.9 98.0 94.0 5,730Monroe Jan 188.6 84.0 115.0 7,452St. Clair Feb 48.0 98.0 98.0 8,500Clinton Mar 31.1 99.0 97.0 9,652Bond Apr 60.9 100.0 111.0 9,860Monroe Apr 57.0 61.0 103.0 10,600Monroe Apr 41.0 100.0 110.0 15,497










Special Interest Stories

Observation of Two Land Partition Suits – by Dan Davis, Columbia, IL ---

Those who are involved in real estate have heard of parti-tion sales of farmland. I believe the majority of farmland owners have a limited knowledge of this practice, or see them as a threat to landowners. TheFreeDictionary.com description of a partition suit is: When the co-owners can-not agree to a voluntary partition, a lawsuit to compel par-tition can be filed to sever property interests. Unless there are exceptional circumstances, a tenant in common or a joint tenant has the absolute right to seek a compulsory partition. Partition must be made even if every other owner objects to it. The motives of the party seeking partition are irrelevant, and the court that hears the lawsuit has no discretion to deny partition. Its main function is to deter-mine the method of executing the partition. Commonly the court will order the property sold and the proceeds divided, instead of ordering a physical partition of the property. If the title to the property is put into issue, most states permit the court to resolve this issue as well as the partition.

Below is a summary of two actual partition suits that took place in Randolph County, Illinois.

In 2008 three heirs each holding an undivided 1/18 interest in five tracts of farmland totaling over 400 acres filed a par-tition suit in Randolph County. Three other cousins owned 1/6 each, and another cousin held 1/3 interest and was the farm tenant. After a year of three sets of attorneys repre-senting the three sets of cousins, and court appearances, the property was appraised, and a public auction date set.

The three 1/18’s ran their own ads in the local paper, mailed copies of the appraisal to interested parties, and placed For Sale signs on the tracts. The auction in the courthouse was well attended with the bidding being between neighboring farmers, a local land investor, and the 1/3 interest cousin/tenant who wore a bullet-proof vest and videotaped the other bidders. The cousin/tenant was the successful bidder. The auction results were higher than the appraised values, making the petitioners happy. In 2011, after years of unsuccessful negotiations within the family, two cousins with an undivided ¼ interest filed a partition suit in Randolph County against the other 10 cousins who held the other ¾ interest. In 2012, the court ordered an appraisal of the 360+ acre recreational prop-erty and set the date of the courthouse auction. The only ads were the required legal notices in the local paper. The judge handled the auction in his courtroom, not the sheriff who typically handles the partition auctions. At the auction, a neighbor bid the minimum 2/3 of ap-praised value. The 10 cousins asked for a 10 minute recess, which was granted. After the recess the cousins returned to the room and watched as the judge asked for any more bids. None were received, and the land sold to the neigh-bor for 2/3 of appraised value. Before the auction the cous-ins had been informed that they could bid, and since they owned 75% of the land, it would actually only cost them 25 cents of each dollar bid. The 10 cousins left the court room unhappy that they lost grandfather’s land.In one case a partial owner acquired sole ownership at market value, and in the other the original owners were bought out at below market value. It seems being proactive is more rewarding than being passive in a partition suit.


Exc. Productivity 250 285 300 1 yr 285 5 85 10 Good Productivity 200 230 250 1 yr 240 5 85 10 Avg. Productivity 175 185 200 1 yr 200 5 85 10 Fair Productivity 130 150 175 1 yr 170 5 85 10 Recreational Land 15 20 25 1 yr

Crop share leases are still popular in southern Illinois. With the rise in grain prices, these leases have provided good returns. Flexible cash rent leases are still gaining popularity. Grain prices were strong, so base rent levels and bonus levels were set higher than in 2011. The hot and dry summer capped corn yields, and many bonuses that were based only on yield did not trigger on acres planted to corn. However, many soybean fields did provide bonus payments.

The bonus clauses that were based on yield and on price also provided dividends, thanks to strong grain prices. The range for these bonuses was $50 to $100 per acre.

If grain prices remain at their high levels, base cash rent levels as well as bonus payments should be higher in 2013.


Reg

ion 9

David M. Ragan – Chair Farm Credit Services of Illinois, Effingham, IL

Brett Berger, ARA Brett Berger, ARA, Albion, IL

Donald K. Cochran, ARACochran Ag Services, Wheeler, IL

Joe HoganFarm Credit Services of Illinois, Shelbyville, IL

Shanda McCroryFarm Credit Services of Illinois, Flora, IL

Norbert Soltwedel, RPRA Shumway, IL

Region 9 is located in Southeastern Illinois and contains 13 counties. Most soils were formed from prairie and timber vegetation in the Illinois glacier

till. Several areas include bottomland soils located along the Kaskaskia, Little Wabash, Embarrass and Wabash Rivers.

Interstate highway access is available to Region 9. Inter-state 57 is located in the western part of the region, Inter-state 70 runs through the northern counties and Interstate 64 serves a part of the southern counties.

This year seen strong increases in land prices similar to 2011. Pricing increased more for the better quality land than for the lower quality soils. There was not much change in pricing for recreational or transitional land.

Good Productivity TractsMost of the Good Productivity soils are located along the Wabash River and there are small areas of Virden, Shiloh and Ebbert soils located in prairie uplands. Most soils in our region have a productivity level below 115, so we have few sales of Good Productivity soils.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcLawrence Dec 104.0 98.1 119.4 9,300

Average Productivity TractsAverage Productivity soils make up the majority of the cropland in our region. Most of the soils are developed

Region 9 - Southeast


% Change Change in rate of land Ave. Cash Rent/Ac. Total in /Acre turnover (up, steady, Ave. Cash Rent % Change on recentlyFarm Classification Value/Acre from 2011 down) and % Per Acre from 2011 negotiated leases Excellent Productivity None Good Productivity $9,500 27.5 20% $285 27.5 $300Average Productivity $7,500 12 20% $225 12.5 $250Fair Productivity $5,250 11 20% $175 Flat $200Recreational Land $3,000 Flat Stable Transitional Tracts $10,000 Flat Stable


from prairie and timber vegetation. Prices for this land class vary widely throughout our region although all coun-ties have experienced increasing sales prices.

In 2012, sale prices ranged from around $34.79 per PI point to $133.97. The average for all sales reviewed in Region 9 was $63.54 per PI point; up 16.5 percent from the 2011-year.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcJasper Dec 57.5 96.7 108.0 9,750Effingham Dec 35.0 100.0 107.9 7,000Wayne Nov 640.0 97.5 109.2 7,930Fayette Nov 156.6 99.6 109.8 6,833Clay Jun 33.2 100.0 102.6 6,000Wabash Aug 19.0 95.3 101.0 7,250Clark Sep 80.0 93.8 108.0 7,500Cumberland Jun 65.4 99.3 102.0 8,726Richland Mar 92.0 94.2 104.7 6,250Marion May 40.0 100.0 108.5 7,250Effingham May 40.0 100.0 112.6 9,900Crawford Apr 42.0 91.7 109.0 5,800Crawford Mar 77.0 100.0 111.1 6,429Fayette Mar 55.0 99.3 111.0 6,193Clay Feb 161.5 99.3 105.7 6,000Lawrence Feb 35.5 87.1 100.0 4,500Cumberland Jan 61.3 94.6 102.0 6,500

Fair Productivity TractsMost of the Fair Productivity land is located in the south-ern part of our region, but fair soils are present in all coun-ties. Many of these tracts are only partially tillable and may have irregular shaped fields. Demand for additional cropland has led to an increase in prices for this land cat-egory. In 2012, price of fair cropland ranged from $28.60 to $122.61 per PI Point; averaged $64.67.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcJasper Dec 65.0 80.0 97.0 6,250Fayette Dec 60.0 94.5 95.8 5,600Effingham Dec 54.7 83.1 97.7 7,456Wayne Oct 40.0 80.0 97.1 4,000Jasper Sep 40.00 98.0 97.2 6,175Clay Aug 109.6 91.2 96.3 4,249Lawrence Aug 68.4 80.6 94.7 4,387Effingham Jul 32.6 85.4 99.9 4,609Fayette Jun 40.0 56.5 95.5 2,825Clark Jun 50.7 67.1 94.0 3,318Cumberland May 40.0 85.0 90.2 5,250Crawford May 63.0 48.7 98.2 4,841Jasper Apr 20.0 88.5 99.9 5,500Wayne Apr 60.6 96.6 98.0 4,622Marion Mar 90.0 88.9 99.4 4,444Wabash Mar 20.0 75.0 95.0 4,091Edwards Mar 20.0 66.0 97.1 4,950Cumberland Mar 17.0 97.7 97.0 4,500Lawrence Feb 44.6 80.4 92.5 5,500Richland Jan 95.0 72.1 93.6 3,842Clark Jan 140.0 92.9 99.0 5,357

Recreational TractsRecreational land prices remained stable in 2012. Many of these tracts include some tillable acres in smaller, irregular shaped fields. Some partially tillable tracts are being pur-chased for cropland use. Region 9 sales ranged for $2,640 to $4,525 per acre in 2012.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcFayette Apr 28.1 51.0 101.4 3,900Fayette Apr 20.0 0.00 N/A 2,600Wayne May 175.4 42.5 64.1 2,600Fayette May 42.0 20.5 92.9 1,905Fayette May 20.0 0.0 N/A 2,900Wayne May 60.0 34.2 N/A 2,500Clay May 36.7 0.0 N/A 2,996Clark Aug 20.0 0.0 N/A 3,000Cumberland Sep 80.0 28.1 99.0 4,525Clay Oct 20.0 0.0 N/A 2,500Wayne Nov 26.0 32.7 97.7 3,465Jasper Nov 40.0 32.8 90.6 2,500Wayne Jan 200.0 97.7 98.4 6,300Fayette Jan 20.0 90.5 99.3 2,600Wayne Apr 40.0 0.0 N/A 2,275Marion Jul 20.0 0.0 N/A 2,500Cumberland Aug 42.4 89.6 115.0 3,250



General Appraiser

Dale Kellermann Real Estate Broker, AFM,

CCA, State Certified General Appraiser




[email protected] N Water St Decatur, IL 62523217.872.6291

[email protected] S. Lincoln Ave O’Fallon IL, 62269618.622.9490


CustomizeD agriCulture serviCes



Reg

ion 9

Transitional TractsThere was little activity in transitional land for 2012 and very little land developed. The Jasper County sale was bot-tomland and purchased by a rural water company for well sites. The Fayette County sale was located inside the city limits of St. Elmo. The property is accessed via an ease-ment, so there would be limited development potential. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcJasper Dec 101.9 93.7 126.9 5,000Fayette Nov 77.4 72.5 98.9 7,427Effingham Nov 14.8 N/A 11,000Effingham Nov 9.9 N/A 12,400Effingham Nov 5.0 N/A 12,400Effingham Jan 5.0 N/A 9,215


operation?




Other Tracts — BottomlandMost of the bottomland cropland in Region 9 is Class B or C soils. Pricing for these lands can vary substantially due to flood protection, their location and ease of access and their potential for irrigation. Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcLawrence Dec 54.6 84.8 114.6 5,900 Crawford Dec 100.0 100.0 105.3 4,876 Fayette Dec 145.0 88.1 125.7 3,483Jasper Dec 40.0 55.0 127.7 2,500Jasper Dec 48.0 49.8 132.0 3,400Jasper Oct 55.0 76.9 123.0 4,805Crawford Aug 80.0 98.5 108.9 6,250Fayette Jul 105.9 53.9 131.2 4,202Jasper May 60.0 88.0 124.1 4,400Fayette May 254.2 85.1 122.6 4,604 Fayette May 57.6 62.7 124.6 4,516Fayette Apr 39.8 95.0 112.0 4,271Jasper Apr 40.0 91.0 115.2 6,900 Cumberland Feb 41.2 71.7 101.0 2,700Jasper Jan 89.4 97.3 115.2 3,484Lawrence Jan 119.8 95.3 114.6 4,250

Special Interest Stories There was a large auction of 2,320 acres of land in Fay-ette County in March. The property was offered in ap-proximately 30 tracts and included upland and bottomland cropland in addition to recreational tracts.

Auction sales are becoming more popular in this area and often seem to bring higher prices than the private sale agreements. In turn, some buyers are now offering higher prices to avoid the property from going to auction.

Auctions with buyer’s premium charges are more common in Region 9. Most premiums are in the range of 2 to 3 per-cent, but have been as high as 6 percent in the Lawrence County area.

This year’s drought has influenced the farm market. In the spring, prices were showing strong increases. With the summer drought, land prices stabilized and there was little activity. In the fall, once crop insurance payments were certain, the increase in land prices continued.




Good Productivity 250 275 325 2 years 300 50 30 20 Avd. Productivity 200 225 275 2 years 250 50 30 20 Fair Productivity 125 175 200 2 years 190 50 30 20 Recreational Land Pasture

Lease TrendsLease terms of flexible cash rents vary widely. The past year some landowners have been somewhat disappointed with their payments due to the drought. One new contract now specifies a base payment off the spring insurance guarantee.

Some newer contracts also include:

• A payment based on the crop pro-duced (i.e. $1.00 per bushel of corn and $3.00 per bushel of soybeans)

• A payment of 25 percent of the crop produced and priced as of the day of harvest. This lease includes an upper limit of what would be paid per acre.

• $100 per acre base rent with 25 percent of the net profit above the base payment.

• A lease payment of $150 per acre to the landowner. After an additional $150 per acre has been deducted for the tenant, any remaining profit is divided 1/3 for the landown-er and 2/3 for the tenant.

Flexible cash leasing has become more common to Region 9. Many landowners have favored these terms as a method of providing certain income with a bonus in good years. Fixed rates and base rates in flexible leases appear to have increased on new contracts, although not at the rate seen over the past few years.

Fixed rate cash rents leases appear to remain stable. Flex-ible leases seem to be replacing crop share leases. Many fixed rate leases are older and tend to continue from year to year without change. Many tenants, when they have a good year, share a bonus with the land owner to avoid losing the lease arrangement. Some of these older arrangements are still around $110 per acre.

The newer leases seem to be written for longer contract terms. Three to five year terms are becoming more com-mon in this market.

Rates vary throughout Region 9. Rents are typically higher in the north part of the regions. Share leasing is also more common in the south part of the region.


Reg

ion 9






Phil Eberle – ChairCarbondale, IL

Brett Berger, ARA Brett Berger, ARA, Albion, IL

Tom HarmonHarmon Appraisal Service, Shawneetown, IL

Doug Healy, ARAFarm Credit Services of Illinois, Harrisburg, IL

Todd HortinFarm Credit Services of Illinois, Harrisburg, IL

Robert KiesecomsShawnee Farm Business Farm Management Association, Harrisburg, IL

Roger RaubachRaubach Appraisal Service, Albion, IL

Matt St. LedgerFarm Credit Services of Illinois, Albion, IL

Land values for agricultural tracts increased sharply in 2012 from the previous year. Good productivity tracts, which are a smaller part of the region’s sales,

increased by 30 percent. Land values for average produc-tivity tracts, which comprise the largest number of sales by land class category, increased approximately 22 percent in area 1, a competitive market area, and increased similarly by 24 percent in area 2, a less competitive market. Land values for fair productivity tracts also increased at smaller rate of 13 percent. Recreational tracts showed no change in land values from the previous year. Volume of land transfers was steady across all productivity categories.

Cash rents and leasing arrangements varied widely across the region. The large increase in land values from previous year did not carry over to cash rents. Committee members

reported very little change in cash rents. The percentage of flexible cash rents is increasing, and some tenants under pressure to pay higher cash rents are proposing share rents plus paying typical landlord expenses for a longer lease.

Despite the drought and low yields of the past year, farm-ers were not hurt. Crop insurance and other benefits offset the low yields. From recent land sales, it appears that local farmers have sufficient funds for expansion purposes. Landlord’s with crop share leases and no crop insurance bore the brunt of the drought impact

Good Productivity TractsThe sales of Good Productivity tracts are not common in the region accounting for less than 10 percent of land

Region 10 - Southern


% Change Change in rate of land Ave. Cash Rent/Ac. Total in /Acre turnover (up, steady, Ave. Cash Rent % Change on recentlyFarm Classification Value/Acre from 2011 down) and % Per Acre from 2011 negotiated leases Exc. Productivity Good Productivity $9,452 Up 30% Steady $183 $185-$250Avg. Productivity $6,252/$4,422 Up 21.5% - 23.9% Steady $168/$125 $150-$200Fair Productivity $3,555 Up 13.1% Steady $113 $100-$140Recreational Land $2,483 No change Steady


Reg

ion 1

0

transfers. Sales are primarily due to deaths or retirement. Buyers are typically local farmers purchasing for expan-sion. Half of the sales were auction sales for this category for this past year.

This quality of land is located primarily in northern and eastern White County, northern Gallatin County, northern Saline County, and in the levee protected bottoms of the Mississippi River in Jackson County.

The average price for good productivity tracts was $9,452 per acre in 2012 compared to $7,288 for 2011. The range in values narrowed in 2012 from $8,262 to $10,504 as compared to the 2011 range from $5,968 to $10,504.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcGallatin Jan 40.0 96.8 132.0 9,000White Aug 51.4 94.3 131.4 8,942Gallatin Sep 160.0 94.6 121.7 9,928Gallatin Nov 82.1 100.0 122.0 10,504White Nov 78.2 86.3 126.1 9,030White Nov 55.8 92.2 121.9 10,500

Average Productivity TractsAverage productivity tracts are the most common quality of crop production farms found in Region 10 accounting for about half of all transfers. The majority of the buyers

of these farms are area farmers purchasing land to expand their current farming operations. The sellers are mostly es-tates and their beneficiaries and retiring farmers. There was also a sizable minority of sellers who were investors.

Observed sales of this quality of farm were in a wide range from $2,230 to $8,442 per acre. In past years, the commit-tee has reported a differentiation between prices observed from the general area and from stronger farming and sales “pockets” scattered throughout the region. The 19 sales from the typically stronger sales areas (Area 1) ranged in values from $4,925 to $8,442 with an average of $6,252 per acre. The 34 sales from the more typical areas (Area 2) ranged in values from $2,230 to $7,023 with an average of $4,422 per acre.

Farms from Area 2 are most representative of the produc-tivity in Region 10 accounting for about a third of all sales. Above is a sampling of sales from Area 1 and Area 2. Note that the percent of tillable acres is typically lower for tracts in area 2. Area 2 had an average tillable fraction of 87 per-cent percent compared to 93 percent for area 1.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcArea 1 White Feb 80.0 97.6 100.0 5,000Gallatin Feb 18.0 100.0 119.1 6,667White Oct 45.0 98.9 107.6 6,500Franklin Nov 50.0 100.0 108.5 5,700

Area 2 Jackson Mar 2498.0 82.9 100.5 4,696Jackson Aug 40.0 60.3 111.5 3,750Massac Nov 160.0 93.9 102.4 3,000White Dec 106.0 94.7 103.3 5,000

Fair Productivity TractsMany of the Fair Productivity tracts have a lower percent-age of tillable acres in addition to a lower soil productivity index as compared to average productivity farms.

Fair Productivity tracts often have value for recreational uses in addition to crop value. The average percentage of


operation?





Region 10 Land Values Summary Chart: 2001-2012tillable acres was 86 percent com-parable to area 2 tracts of Average Productivity, but lowers than area 1 tracts of average productivity.

The buyers of the higher cropland percentage farms are mostly local farmers while the buyers of the lower percentage cropland farms are more likely to be recreational buyers. The sellers are mostly retired farmers and estates. These farms typically have sloping topography and/or weak soil types. Prices increased by 13 percent from 2011. Sales ranged in values per acre from $2,250 to $5,510 per acre with an average of $3,555.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcFranklin Jan 60.0 90.5 96.0 3,500Jackson Feb 99.6 63.3 101.2 3,390Jefferson Feb 25.5 92.9 92.8 2,980Williamson Mar 26.5 94.0 97.3 3,414Jefferson May 63.0 93.8 90.6 3,500Johnson Jun 120.0 80.5 84.4 3,000Hamilton Aug 80.0 67.5 94.7 3,000Hamilton Sep 40.0 91.0 79.6 2,800White Sep 80.0 88.4 90.3 4,375Jackson Oct 39.2 76.2 97.5 ,3500White Oct 30.0 84.7 100.1 4,500

Recreational Tracts

Many of the sales of recreational tracts in the region are through realtors. The primary recreational use for these properties is deer hunting. Prior to the surge in recreational land purchases, these farms were purchased by farmers for agricultural purposes. Most of these tracts consist of a com-bination of low quality open land (cropland, pasture, other open land) and wooded areas. Recreational values ranged from $1,193 to $3,500 per acre with an average value $2,483. Prices remain unchanged from 2011.

Sale Total % P / I on $ TotalCounty Date Acres Tillable Tillable Ac Price/AcSaline Jan 80.0 80.0 108.9 2,475Hamilton Jan 42.8 0.0 2,453Union Jan 87.7 48.0 2,800Gallatin Feb 75.0 0.0 2,613Jefferson Feb 89.3 0.0 2,292Jackson Mar 63.5 53.5 107.3 3,500Pulaski Apr 81.5 47.7 2,475Hamilton Jul 80.0 35.4 2,200White Aug 69.0 19.6 2,301Alexander Aug 76.0 19.5 $1,855Hardin Oct 588.0 22.7 $2,200

Lease Trends

Although the majority of leases are share leases, cash leases make up the majority of new leases, and in the past year flexible cash leases are exceeding the traditional cash lease. Terms of flexible cash lease vary widely in region; many have a base rent with an increase in rent based on price and/or yield exceeding a certain level. There is a trend toward a certain amount of income going to the ten-ant then the landlord receives a share, possibly one-third of the income that exceeds that certain level. For example, one agreement has a base cash rent, then the farmer (ten-ant) keeps track of income and expenses and pays the landlord a bonus if 25 percent of net income exceeds the base rent. The tenant pays a bonus up to 25 percent of net income.

There was very little change observed in cash rents, but there is a wide range of rents from $50 to $275 per acre with some of the higher rents on irrigated farmland. Most producers have been pro-active in managing the relation-ship with the landlord for cash rents and establishing an understanding of the growing conditions in Southern Il-linois.

The higher cash rents typically prevail when you have a landlord situation that has lost touch with the farming con-ditions, such as production capabilities and yield variabil-ity, of the farm they have inherited. As higher cash rents are pressed, tenants will try to revert back to a crop share lease to reduce their risk exposure.

The selling point of crop share is that, with today’s prices and yield opportunities, the landlord’s share will often exceed a competitive cash rent. It then becomes a choice between how involved the landlord wants to be in shar-ing the cost in exchange for a likely higher return; how


Reg

ion 1

0


Good Productivity 185 200 240 3 185-250 25 35 40 Avg. Productivity 155 175 200 5 150-200 30 35 35 Fair Productivity 90 110 147 5 100-140 30 40 30 Recreational Land 3 5 10 Pasture 30 45 60

much loyalty there is between the landlord/tenant, and how competitive the environment is for leasing. Some tenants are offering to share cost of irrigation and tiling expense for a longer and more favorable crop share lease. On newly written leases for average and fair productivity tracts, the length of the lease for many contracts is 5 years compared to the traditional annual renewal. Tenants would like to have a lease contract of 5 years on tracts of good productivity, but landlords are reluctant to agree, therefore the typical length of contract is 3 years for good productiv-ity tracts.






Agricultural Price ProspectsThe primary drivers of high crop prices in the last half of 2012 were the drought-reduced soybean crop in South America and the drought-reduced corn crop in the United States. In addition, the Argentine corn crop, the U.S. soy-bean crop, and the wheat crops in the former Soviet Union and Australia were adversely affected by poor growing conditions. These shortfalls were partially offset by very large corn crops in China and Brazil. Overall, 2012 could be classified as a “short crop” year for the major crops. Short crop years generally come with the following expec-tations:

1) Crop prices move sharply higher in a short period of time in order to motivate users of those crops to reduce the pace of consumption in line with available supplies;

2) For U.S. crops, the largest reductions in consumption are in the domestic livestock sector, where consumption is the most sensitive to prices;

3) Prices reach a peak early in the marketing year as consumption rates decline and evidence of sufficient rationing emerges, and then decline in some unpredict-able pattern in the following months;

4) Crop prices return to “normal” levels as early as the fol-lowing marketing year as production rebounds;

5) Livestock producers liquidate herds, resulting in in-creased production and lower prices in the very short run, but smaller supplies and higher prices in the longer term.

These expectations provide useful context for evaluating agricultural price prospects into next year. Following is a brief analysis of price prospects for corn, soybeans, wheat, cattle and hogs.

Corn Corn prices peaked in August 2012 and have moved er-ratically lower since then in a classic short-crop pattern. Corn consumption slowed at the higher price levels, but the slowdown was not as expected. Corn exports dropped sharply as adequate supplies of foreign grains replaced high-priced U.S. corn, and the pace of corn-based ethanol production was surprisingly small in the first five months of the 2012-13 marketing year.

In contrast, domestic feed use of corn remained surpris-ingly high in the first quarter of the year as only the beef cattle sector showed a year-over-year decline in produc-tion. Inventories of other classes of livestock remained surprisingly large through January. With some potential for a modest recovery in both exports and ethanol production in the last half of the marketing year, old crop corn prices

are expected to remain at or above early February levels until sufficient rationing has been confirmed. The next in-dication of feed rationing will come with the release of the USDA’s estimate of March 1 stocks on March 28. Prices are expected to remain well supported until at least then.

New crop corn prices are at a sharp discount to old crop prices, but remain relatively high by historic standards. Support is coming from late season weather and crop concerns in South America and the continuation of signifi-cant drought conditions in the western U.S. An increase in U.S. corn acres is expected in 2013, but the market will be concerned about yield and production prospects as long as significant areas of dryness persist. That concern is expect-ed to keep December futures prices at or above the level of a year ago ($5.68) through February, when the projected price for crop revenue insurance is established. A relatively high projected price would provide for downside price pro-tection if the 2013 crop turns out to be as large as expected. An increase in acreage and a trend yield would produce a crop of about 14.5 billion bushels (Figure 1). If U.S. world production is near early expectations, new crop corn prices would drop sharply in the last half of the calendar year, and an average farm price near $4.50 would be expected for the 2013-14 marketing year.

Soybeans Soybean prices peaked in September 2012 and then de-clined sharply as the size of the U.S. crop exceeded early forecasts. However, the pace of consumption of U.S. soy-beans in both the export and domestic markets remained much higher through January than can be sustained by the available supplies. That high rate of consumption was supported by strong export demand for U.S. soybeans, soybean meal, and soybean oil following the small South American harvest in early 2012. China continues to be the largest market for both U.S. and South American soybeans.

The market has allowed the high rate of consumption of U.S. soybeans to continue because of expectations of a very large South American harvest in 2013 (Figure 2).

Prepared by Darrel Good, Department of Agricultural and Consumer Economics, University of Illinois.


Such a large harvest would allow a very sharp reduction in the pace of consumption of U.S. soybeans during the last half of the 2012-13 marketing year. A large South Ameri-can crop seems very likely, but that crop is threatened by some late season dryness in southern Brazil and Argentina. As a result, soybean prices started moving higher again in mid-January. Old crop prices are expected to remain well supported until the size of the South American crop is more certain and the pace of consumption has slowed. Like corn prices, old crop soybean prices should be well supported through March and perhaps longer. New crop soybean prices are at a discount to old crop pric-es, but are high by historic standards. Concern about the South American crop and uncertainty surrounding the 2013 U.S. crop combine for a large risk premium in new crop prices. It now appears that November futures prices will remain above the level of last year ($12.55) in February when the projected price is established for crop revenue in-surance. Such a high price would provide price protection from lower prices as a result of large crops in 2013. A U.S. average farm price near $11 would be expected in 2013-14 if the 2013 U.S. growing season is favorable.

WheatThe United States accounts for a relatively small portion of world wheat production (Figure 3), so that prices are influ-enced less by domestic production than is the case for corn and soybeans. Wheat prices peaked in August 2012, re-mained high through November, and then declined sharply into mid-January 2013. Prices declined as consumption

adjusted to the drop in world production. U.S. exports benefitted less than expected from the decline in foreign wheat production as supplies of lower-priced wheat were adequate to meet world demand. However, the USDA’s September 1 Grain Stocks Report confirmed that domestic wheat feeding during the first half of the 2012-13 market-ing year was much larger than expected. That revelation, along with the continuation of very dry conditions in the U.S. hard red winter wheat producing areas, brought an end to the decline in both old and new crop prices. The USDA’s Winter Wheat Seedings Report showed a 2 percent decline in seedings of hard red winter wheat and a 16 percent increase in seedings of soft red winter wheat for harvest in 2013. Dry conditions are expected to result in an abnormally large abandonment of hard wheat, but condi-tions remain very favorable for soft wheat. Prices will be heavily influenced by spring weather conditions in the U.S. as those conditions will determine the fate of the winter crop and planting prospects for the spring wheat crop. With so much production risk already priced into the market, there is some substantial risk of declining prices if precipi-tation is more normal. Harvest prices for Illinois wheat pro-ducers could drop below $7, compared to $8 last summer.

HogsU.S. hog producers did not make substantial adjustments to the high feed prices experienced since the summer of 2012. The USDA’s December 2012 Hogs and Pigs Report indi-cated that the December 1 inventory was about the same as that of last year. Producers indicated that they would farrow only 1 percent fewer sows in the period December 2012 through May 2013 than in the comparable period a year earlier. As a result, the USDA projects that pork pro-duction in 2013 will be near the level of 2012 (Figure 4).

Exports are expected to remain robust, so that domestic per capita pork consumption will also be near the level of 2012. The U.S. average price of hogs in 2013 is expected to be near $63 per hundredweight, slightly above the 2012 average, due to less competition from beef. Seasonally, the highest prices are expected in the second and third quarters of the year, and the lowest prices are expected in the fourth quarter.

Continued on Page 85


Expected Changes to Farm Programs in Next Farm Bill

Debate over what was scheduled to be the 2012 Farm Bill began well over a year ago, with various organizations pro-viding draft proposals for modifications to farm programs. The Senate successfully passed its version of the Farm Bill in June, with the House Ag Committee approving a draft discussion bill which was released shortly after. However, despite a significant amount of debate and discussion over the following six months, the current Farm Bill received a nine-month extension, through September 2013, as Con-gress scrambled to pass legislation related to the fiscal cliff prior to the end of the year. So, the status of the next Farm Bill largely remains where it has been since June of last year.

The main issue shaping the political debate around the new Farm Bill is the need to cut spending for deficit reduction. Targets for overall spending cuts on Farm Bill programs in early proposals fell in a range from about $23 to $35 billion over the next 10 fiscal years (2013-2022). Both the Senate and House Ag Committee versions of the Farm Bill achieve spending reductions through cuts to commodity, nutrition and conservation programs. While farm commodity pro-grams do not represent the biggest piece of the Farm Bill budget pie, they are the main targets for program modi-fications and reductions in overall support, as they have become more and more difficult to justify with the record farm income levels achieved in recent years. However, support for programs included in the Crop Insurance Title would be increased. These proposed changes suggest a shift in farm program focus, from income support to risk man-agement, where the federal crop insurance program would now serve as the primary safety net for U.S. crop producers.

This article will briefly summarize some of the proposed changes to farm commodity programs outlined in the Sen-ate and House Ag Committee Farm Bills. Existing com-modity programs – direct and counter-cyclical, ACRE, and SURE – are eliminated. The Senate version replaces these programs with a “shallow-loss” revenue program where farmers would have the choice between county- and farm-level coverage. The House version would offer producer’s the choice between a similar county-level revenue program, or fixed price supports with updated target prices for eli-gible commodities. Expansion of crop insurance programs includes the creation of an area revenue program specifi-cally for cotton producers, and a supplemental coverage option for the other major program crops.

Farm Bill Program Spending OverviewFigure 1 summarizes the changes in Farm Bill program spending projected by the Congressional Budget Office for

the Senate and House Ag Committee bills. These projec-tions – or scores from the CBO – are measured by com-paring spending projections over the 2013 to 2022 fiscal year period for current programs to those for the modified programs in each Farm Bill proposal. The Senate version was credited with total savings of $23 billion over current programs, while the House version was scored with $35 billion in savings.

In both cases, the majority of savings would come from the Commodity Title, which includes the traditional farm sub-sidy programs. The Senate bill is scored to cut Commodity Programs by $19.5 billion, which represents a 30 percent reduction compared to existing programs. The House bill cuts more than $23 billion, or 38 percent, from the Com-modity Title. Cuts to conservation programs in both bills is similar, totaling just over $6 billion or almost 10 percent less than projected spending on existing programs. Finally, spending on programs within the Nutrition Title is projected to be cut by $4 billion in the Senate bill and over $16 bil-lion in the House version. Net spending projections for all other program areas are above current spending projections. Programs in the Crop Insurance Title receive the largest increase, with 5.5 percent increase projected in the Senate bill and a 9.9 percent increase in the House version.

Proposed Changes to the Commodity TitleThe spending cuts projected for commodity programs in both Farm Bills are due to the elimination of existing programs, including the direct payment, counter-cyclical, ACRE and SURE programs. Both Farm Bills replace existing programs with revenue-based options designed to protect against “shallow” losses. Conceptually, these shallow loss programs are intended to provide coverage for smaller but more frequent losses in the range of the

By Nick Paulson, Ph.D., University of Illinois Department of Ag and Consumer Economics


individual’s insurance deductible. Thus, the theme is a shift away from income supports and towards risk management, where federal crop insurance is the primary risk protection tool for large yield or revenue losses, and modified com-modity programs would provide limited support for smaller or shallow losses.

Ag Risk Coverage ProgramThe Senate’s version of the 2012 Farm Bill replaces exist-ing commodity programs with a shallow loss revenue program referred to as Ag Risk Coverage (ARC). The ARC program applies to all major program crops, with the exception of cotton, and provides protection for revenue losses between 79 percent and 89 percent of the program’s revenue guarantee. ARC’s revenue guarantee is the product of five-year Olym-pic averages of the national season average price and his-torical yield measured either at the county- or farm-level, depending on the program option chosen by the producer. Actual revenue in a given year is calculated as the product of actual yield at either the county- or farm-level, and the higher of the season average price over the first five months of the marketing year and the loan rate for the specific crop.

Producers would receive a payment on 65 percent of their planted acres if the farm-level coverage option is elected, and 80 percent of planted acres under the county-level cov-erage option. The payment rate on prevented planted acres is 45 percent for both the farm and county program options. ARC also includes a payment limitation of $50,000 per farm entity. Figure 2 below illustrates the shallow loss design of the ARC program for a case where the farm-level option is combined with a crop revenue insurance policy at a 75 percent coverage level. ARC program payments would be triggered if revenues fell below 89 percent of the ARC pro-gram guarantee, with the maximum payment of 10 percent being made if actual revenues were at or below 79 percent of the guarantee. The crop insurance policy in this case covers larger revenue losses, with insurance indemnities triggered only if actual revenues fell below 75 percent of the insurance guarantee. Note that Figure 2 simplifies this

combination of ARC with individual revenue insurance. In reality, the ARC and insurance guarantees are based on revenue measures calculated using different prices and yield histories. Revenue Loss Coverage ProgramThe House version of the 2012 Farm Bill includes a shal-low loss revenue program option referred to as Revenue Loss Coverage (RLC). Producers can elect to enroll in the RLC program as an alternative to the default target price program explained in the next section. The design of RLC is similar to the county-level ARC program in that it covers revenue losses using a guarantee based on historical county yields and marketing year prices.

RLC’s guarantee is the product of 5-year Olympic averages of the national season average price and historical county yields. Actual revenue in a given year is calculated as the product of actual yield at either the county level, and the higher of the season average price over the first five months of the marketing year or the loan rate for the specific crop being considered.

The RLC program triggers payments when actual revenues fall below 85 percent of the revenue guarantee, with the maximum payment reached if losses exceed 75 percent of the guarantee. For example, with a $1,000 revenue guaran-tee, losses would be triggered if actual revenues fell at or below $850 per acre for the year. The maximum payment of $100 per acre (10 percent x $1,000 per acre guarantee) would be made if actual revenues were $750 per acre or lower. Producers receive a payment on 65 percent of their planted acres and 45 percent of their prevented planted acres. RLC payments are subject to a payment limit of $125,000 per farm entity.

Price Loss Coverage ProgramThe House version of the 2012 Farm Bill also includes an updated target price program for producers referred to as Price Loss Coverage (PLC). The PLC program is the default commodity program option (with RLC being the alternative). PLC is conceptually designed to provide fixed price protection similar to the current counter-cyclical program (CCP). However, price support levels, referred to as reference prices for the PLC program, are updated for most commodities. Table 1 outlines the reference prices for selected program crops. In general, PLC reference prices are increased above current CCP target prices.

PLC also differs from CCP in that it provides payments on planted acres (rather than base acres) and allows for a one-time updating option on payment yields by commod-ity prior to being in effect for the 2013 crop year. PLC yields may be updated to 90 percent of the average yield over the 2008 to 2012 crop years. Updates are made based on individual farm yields, thus appropriate yield evidence/records will be required for updating. If individual farm yields in any given crop year from 2008 to 2012 are below


75 percent of the county average yield in that year, a yield plug equal to 75 percent of the county average yield may be used for updating. Thus, in contrast to the current CCP program, PLC provides price protection based on the producer’s current production choices (planted acres), and allows producers to update program yields if productivity has sufficiently increased since CCP program yields were established prior to the 2002 or 2008 Farm Bills.

PLC payments are triggered if the midseason price (season average price over the first five months of the marketing year) falls below the reference price for each crop. Maxi-mum support is provided if the midseason price falls below the crop’s loan rate, at which point support is provided via the marketing loan program through either marketing loan gains or loan deficiency payments. Similar to the RLC op-tion in the House version, total support under the PLC pro-gram is subject to a $125,000 payment limit per farm entity.

Table 1. Loan Rates & PLC Reference Prices for Selected CommoditiesCrop Loan Rate Reference PriceCorn ($/bu) $1.95 $3.70Soybeans ($/bu) $5.00 $8.40Wheat ($/bu) $2.94 $5.50Rice ($/hwt) $6.50 $14.00Peanuts ($/lb) $0.18 $0.27

Crop Insurance Program ExpansionSupplemental Coverage OptionThe Supplemental Coverage Option (SCO) is included in both the House and Senate versions of the 2012 Farm Bill. In general, SCO is an area insurance plan which will be administered by Risk Management Agency (RMA) and sold to producers through crop insurance agents. Producer’s individual insurance program choices, as well as their commodity program enrollment decisions, will impact the coverage provided by the SCO program as well as its premium cost.

In the Senate version of the Farm Bill, coverage provided by the SCO program is impacted by the producer’s enroll-ment decision in the ARC revenue program. For producers who elect NOT to enroll in ARC, SCO provides protection for a portion of the farmer’s insurance deductible. Pay-ments are triggered when losses exceed 10 percent of the county-level guarantee, with coverage extending down to the producer’s elected insurance coverage level. The SCO guarantee reflects the individual insurance coverage level and program choices of the producer. For example, if a farmer purchases yield protection at a 75 percent cover-age level, they can also purchase SCO for county yield coverage from 90 percent down to 75 percent of the county yield guarantee. A producer who elects 80 percent revenue protection could purchase SCO coverage for county-level revenue losses from 90 percent down to 80 percent of the county revenue guarantee.

For producers electing to enroll in either the county- or farm-level ARC program, SCO would cover revenue losses between the farmer’s individual insurance coverage level and 79 percent of the county revenue or yield guarantee, reflecting the coverage above this level provided by the ARC program. Thus, SCO could only be coupled with ARC for producers who elect insurance coverage levels below 79 percent.

Under the House version of the Farm Bill, producers who elect the RLC program option will not be eligible for addi-tional revenue coverage using the SCO program. Producers enrolled in the PLC program would be fully eligible for the SCO program, with loss coverage ranging from their indi-vidual insurance program coverage level up to 90 percent of the SCO guarantee. Again, SCO coverage would be at the county-level and mimic the insurance program choice of the individual farmer. Premiums for the SCO program will be set by the RMA, with producers purchasing coverage through their insurance agent and receiving a 70 percent subsidy on total premium. SCO payments are made on 100 percent of planted acres, and are not subject to any payment limitations.

Stacked Income ProtectionBoth the Senate and House versions of the new Farm Bill outline an area revenue insurance program designed specifi-cally for cotton producers referred to as Stacked Income Protection (STAX). STAX provides county-level revenue protection for up to a 30 percent loss with a 10 percent deductible. This equates to a program with a coverage level equal to 90 percent of the revenue guarantee with the maximum payment reached when revenues fall below 70 percent of the guarantee.

The STAX revenue guarantee is based on the same base and harvest futures prices and trend yields as the GRIP area revenue insurance plan. In the House version, the price component of the guarantee has a floor (minimum) of $0.6861 per pound. The STAX program will be rated by and administered through the RMA, rather than the Farm Service Agency (FSA). Producers would receive an 80 percent subsidy on the total premium charged for the STAX program, and would be able to elect a STAX payment mul-tiplier between 0.8 and 1.2 which acts as a scaling factor for payments they receive.

Implications and ConclusionsWhile Congress has not yet been able to finalize a new Farm Bill, the versions passed by the Senate and House Ag Committee last summer indicate fairly significant changes to farm commodity programs resulting in reduced support to crop farmers. Both bills eliminate the direct, counter-cy-clical, ACRE and SURE programs, and introduce revenue-based program options. Thus, commodity program support is likely to shift from a stream of fixed payments coupled with additional price or revenue to protection, to a system


CattleLiquidation of the U.S. cow herd that began in 2007 con-tinued in 2012. The inventory of all cattle and calves on January 1, 2013 was estimated at 89.3 million, compared to 97 million in 2007, and the peak of 132 million in 1975. The most recent six-year liquidation has been driven most-ly by weather conditions that reduced pasture and forage production and pushed feed grain prices to record high lev-els. As a result of the liquidation, the calf supply has been dramatically reduced, and feedlot placements will continue to be small through 2014. The USDA projects that beef production will decline by 4.5 percent in 2013, following a 1 percent decline in 2012. Average fed cattle prices in 2013 are projected at a record $130 per hundredweight. Those high prices are expected to continue well into 2014.

Continued from Page 81Agricultural Price Prospectswhere payments are only received if losses are triggered by

price or crop revenues falling below guarantees which will change over time. Therefore, while expected support over time is projected to be lower, it could also be argued that the proposed programs will provide more timely support during periods of financial stress.

The revenue programs outlined in the current Farm Bills protect against shallow losses and are intended to work with, rather than substitute for, existing crop insurance pro-grams. Thus, once a final Farm Bill is passed, land owners and farm operators will need to carefully consider the risk management options to which they have access. There are a number of subtle, but important differences in the program designs which are included in the current versions of the Senate and House Farm Bills. These include differences in coverage levels, program payments rates, and payment lim-its, as well as differences in the type and timing of revenue or price risk being offered. The shallow loss commodity programs protect against movements in cash price levels relative to historical averages. The PLC target price pro-gram protects against price declines relative to fixed price supports. Crop insurance programs provide yet another type of price protection, specifically against futures price move-ments within a specific crop year. Additionally, the farmer’s choice of commodity program coverage may impact their eligibility to use other programs, such as the new SCO insurance program.

Similarly, an individual’s choice of insurance program and coverage level will impact the additional coverage that can be obtained by using SCO. For example, the 80 percent subsidy rate outlined for SCO could provide incentives for some crop producers to reduce their coverage level to take advantage of a higher subsidy rate on their individual plan of insurance. However, farmers must keep in mind that SCO covers losses at the county level and that their effec-tive risk protection may not remain the same under this strategy, despite the relatively high 90 percent coverage level currently set for the SCO program.

In summary, given the program changes currently outlined in the Senate and House Farm Bills, the farm safety net is expected to require the producer to choose among a fairly complicated set of commodity and crop insurance programs in forming their operation’s risk management strategy. The extension of the 2008 Farm Bill through September of 2013 has allowed for additional delays in finalizing what will now hopefully be a 2013 Farm Bill. While expectations are that the final Farm Bill will resemble what is included in the versions passed by the Senate and House Ag Committee last year, additional changes could be made over the next few months. Of particular concern is the potential for even larger spending cuts than are currently achieved in either Farm Bill, and how that might affect the fairly significant changes already proposed for the both the Commodity and Crop Insurance Titles.


The Illinois Society of Professional Farm Managers and Rural Appraisers conducts an annual survey in which it asks knowledgeable individuals about the farmland market. This year, the survey focused on land price changes in 2012, expectations for 2013 and the next five years, characteristics of buyers and sellers, and volume of farmland sold.

Land Prices Increased 16 to 21 Percent in 2012Respondents were asked to estimate farmland prices on January 1, 2012 and December 31, 2012 for the following farmland quality classes: 1. Excellent (over 190 bushels per acre), 2. Good (170 to 190 bushels per acre), 3. Average (150 to 170 bushels per acre), and 4. Fair productivity farmland (less than 150 bushels per acre).

Price of excellent productivity farmland was estimated at $10,510 per acre price on January 1, 2012 and $12,670 per acre price on December 31, 2012, an increase of 21 percent during the year (see Table 1). Good quality farmland price was estimated at $8,980 at the beginning of the year and $10,500 at the end of the year, an increase of 17 percent. Average farmland price was $7,560 per acre at the beginning of year and $8,770 at the end of year, an increase of 16 percent. Fair productivity price was $5,980 at the beginning of the year and $6,980 at the end of the year, indicating a price increase of 17 percent.

Table 1. Estimates of Land Price, Beginning and Ending of 2012 Productivity Jan. 1, 2012 Dec. 31, 2012 % Change $ per acre Excellent 10,510 12,670 21% Good 8,980 10,500 17% Average 7,560 8,770 16% Fair 5,980 6,980 17% Land price increases in 2012 were comparable to 2011 increases, when all land classes has close to a 20 increase. Increases in 2011 and 2012 were above average. Average yearly increases in land prices averaged 7.0 percent across all of Illinois between 1970 and 2012. Yearly increases averaged 12 percent from 2006 to 2012.

Expectations for 2013 and the Next Five YearsMost respondents expect farmland prices to increase in 2013 (see Figure 1). Forty-seven percent of respondents expect farmland prices to increase, with 11 percent expecting prices to rise more than 5 percent and 36 percent expecting prices to rise between 1 and 5 percent. Of the

respondents, 23 percent expect farmland prices to remain the same while 9 percent expect farmland prices to decline.

Overall, price increase expectations are more cautious for 2013 as compared to similar responses last year for 2012. When asked last year, over 63 percent of respondents expected prices to increase for the coming year. This year, only 47 percent expect price to rise in the coming year. Respondents were asked what they believed the chances were of a 20 percent decline in farmland prices during 2013. This question gauges the sentiments of respondents concerning a large downward correction in prices. One percent of respondents indicate that the chances were over 10 percent, 10 percent indicated a 5 to 10 percent change, and 23 percent indicated the chance was less than 5 percent (see Figure 2). Seventeen percent of respondents indicated that there was no chance of a decline.

Overall, respondents believed that there are lower chances of large price declines in 2013 as compared to 2012. Percentages in the “no chance” and “very small chance” categories increased between 2012 and 2013 while the percentages increased in the higher probability categories (see Figure 3). For example, 12 percent of the respondents

Continuing Increases in Farmland Prices in 2012Prepared by Gary Schnitkey, Ph.D., University of Illinois Department Ag and Consumer Economics


indicated that there was more than a 10 percent chance of a farmland price decline was more than 20 percent in 2012. The 12 percent became 1 percent in 2013.

Most respondents expect farmland prices to increase over the next five years. Fifty-five percent of respondents expect farmland price increase to average between 0 and 5 percent over the next five years, with 19 percent expecting higher average increases. Only 25 percent of respondents expect yearly increases to average negative over the next five years.

Sellers of FarmlandSurvey respondents were asked to divide sellers of farmland into six categories: active farmers, retired farmers, estate sales, institutions, individual investors, and others. Estate sales accounted for 58 percent of the sales and were, by far, the largest category of sellers (see Table 3). Estate sales were followed by farmers, making up 17 percent of sellers. Fourteen percent of those farmers were retired and 3 percent were active farmers. Individual investors accounted for 15 percent of the sellers, followed by institutions (6 percent) and others (4 percent).

Table 3. Sellers of Farmland, 2012 Active farmers 3% Retired farmers 14% Estate Sales 58% Institutions 6% Individual investors 15% Others 4%

Survey respondents were asked to identify reasons why farmland was sold. The major reason for selling farmland was to settle estates, accounting for 59 percent of the farmland sales (see Table 4). “Receiving a good price for farmland” was the next highest reason with 26 percent of the sales. Remaining reasons were: need cash (4 percent), Re-orient investment portfolio (5 percent), Close-out undivided interest (4 percent), and Forced liquidation (2 percent). Overall, most sales occurred to free up funds for other uses and were not the result of financial stress.

Table 4. Reasons for Selling Farmland, 2012 Settle Estates 59% Need cash 4% Forced liquidation 1% Received a good price 26% Re-orient investment portfolio 5% Close-out undivided interests 5% Overall, percentages shown in Tables 3 and 4 vary little across years. For example, estate sales make up the largest category of sellers for the last several years of the survey. Stability in these percentages is indicative of a stable source of sellers of farmland. Generally, sellers either represent estates or farmers coming to the end of their careers. In either of these cases, the number of sellers will not change greatly over time as a result of changes in the farmland market.

Methods used for selling farmland are shown in Table 5. Forty-four percent of sales were sold by public auction, 35 percent by private treaty, 13 percent by multi-parcel auction, and 8 percent by sealed bid. The percent of sales made at public auction have been increasing in recent years.

Table 5. Method of Selling Farmland Sealed bid 8% Multi-parcel auction 13% Public auction 44% Private treaty 35%

Buyers of FarmlandSurvey respondents were asked to classify buyers into categories as farmers, investors, institutions, or recreational buyers. Farmers accounted for 72 percent of the purchasers, with 70 percent being local farmers and 2 percent being relocating farmers (see Table 6). Individual investors who would not farm the land were the next largest group, accounting for 20 percent of the buyers.

Non-local investors accounted for 14 percent of the buyers and local investors accounted for 6 percent. Institutions accounted for 4 percent of buyers. Survey respondents indicated that 53 percent of farmland buyers did not require debt financing. Of those requiring financed, 47 percent of the purchase was financed using debt capital.

Table 6. Buyers of Farmland, 2012 Local farmers 70% Relocating farmers 2% Non-local investors 14% Local investors 6% Institutions 4% Other 4% There has been an increase in interest in farmland investing from outside the agricultural sector. Sixty-seven


percent of respondents indicated that outside interest has increased, with 15 percent indicating that there had been a substantial interest (see Figure 4). As of yet, this interest has not resulted in a large change in percentages in the “buyer of farmland” categories. Volume of Farmland SoldRespondents indicated that there was a substantial increase in the volume of farmland sold during the last half of 2012 compared to the last half of 2011. Seventy-one percent of respondents indicated that volume increased, with 39 percent indicating that there was a substantial increase in farmland volume. Twenty-five percent of respondents indicated that there was no change in volume, with 4 percent indicated that volume decreased.

Nine percent of the respondents indicated they expect volumes of sales to increase during 2013. Thirty-seven percent expect no change in volume and 9 percent expect a decrease in volume.

SummaryDepending on productivity class, farmland prices increased by between 16 and 21 percent during 2012. The increases in 2012 were similar to those in 2011. Increases in 2011 and 2012 have been well above historical averages. Respondents expect farmland prices to increase during 2013. Respondents expect slower growth in 2013.


The Illinois Society of Professional Farm Managers and Rural Appraisers conducts an annual survey of its membership concerning farmland leasing in Illinois. Survey results indicated that 2012 incomes from owning farmland were above 2011 levels. Cash rents for 2013 increased over 2012 levels; however, 2013 increases are less than occurred in 2012. Specifications of variable cash leases also are reported in this paper.

2012 IncomesSurvey respondents were asked to estimate average incomes landlords received from alternative leases. Incomes were asked for the 2012 cropping year. Average incomes equaled gross revenue less all expenses, including a deduction for property tax. Alternative leases are: 1. share rent leases – landlord and farmer share in crop revenues and crop expenses, 2. cash rent leases – farmer pays the landlord a fee for the farmland. The farmer receives all crop revenue and pays all crop expenses. 3. custom farming arrangements – landlord pays the farmer for performing field operations. The landlord receives all crop revenue and pays all crop expenses.

Net incomes for 2012 are reported in Table 1 for four different land qualities: 1. Excellent (over 190 bushels per acre), 2. Good (170 to 190 bushels per acre), 3. Average (150 to 170 bushels per acre), and 4. Fair (less than 150 bushels per acre).

For excellent quality farmland, traditional crop shares had average income of $345 per acre, cash rent had $348 per acre, and custom farming had $490 per acre. Returns from share rent and cash rent leases were near one another in 2012 across all land qualities. Custom farming had the highest returns.

Table 1. Per Acre Farm Incomes Landlords Receive for Different Lease Types & Land Qualities, 2012

Land Quality

Lease type Excellent Good Average Fair ------------------ $ per acre --------------------- Traditional crop share 345 291 252 198 Cash rent 348 294 242 194 Custom farming 490 401 324 240 In general, incomes were higher in 2012. Table 2 shows incomes for 2012 minus incomes for 2011. Positive numbers indicated incomes are higher in 2012 than in 2011. For excellent productivity farmland, traditional crop share income was $29 per acre higher in 2012 as compared

Cash Rent Levels Increase in 2013Prepared by Gary Schnitkey, Ph.D., University of Illinois Department Ag and Consumer Economics

to 2011. Cash rent income was $25 higher in 2012 as compared to 2011 while custom farming income was $56 per acre higher.

Table 2. 2012 Incomes Minus 2011 Incomes Land Quality

Lease type Excellent Good Average Fair ------------------ $ per acre --------------------- Traditional crop share 29 16 21 15Cash rent 25 14 5 12Custom farming 56 31 21 9

Cash Rents for 2013Table 3 shows per acre cash rents anticipated for the 2013 crop year. Average cash rents again are broken out by four different land quality classes: excellent, good, average, and fair quality. In each class, respondents were asked to give the average of rental arrangements with the highest 1/3 rents, mid 1/3 rents, and low 1/3 rents.

Table 3. Per Acre Cash Rents for High 1/3, Mid 1/3, and Low 1/3 Cash Rent Leases by Land Quality, 2013

Land Quality

Category Excellent Good Average Fair ------------------ $ per acre --------------------- High 1/3 447 385 324 265Mid 1/3 396 339 285 235Low 1/3 320 274 221 179

As can be seen in Table 3, there is a great deal of variability in cash rents for a given land productivity. For example, the average cash rent for the mid 1/3 group on excellent quality farmland is $396 per acre (see Table 3). The high 1/3 of leases, however, average $447 per acre, $51 higher than the mid 1/3 group. Similarly, the low 1/3 group average $320 per acre, $76 lower than the mid 1/3 group. From the high 1/3 group to the low 1/3 group, there is a $127 per acre difference in average rents for excellent productivity farmland. Similar ranges exist across good ($111 from the high 1/3 to low 1/3 averages), average ($103 per acre), and fair ($86 per acre) quality farmland classes.

Cash rent levels have increased over the past several years. In 2007, rents for the mid 1/3 for excellent quality farmland were $183 per acre (see Table 4). From $183 per acre, cash rent levels increased to $241 per acre in 2008, $267 in 2009, $268 in 2010, $319 in 2011, $379 in 2012, and $396 in 2013. Since 2007, mid 1/3 rents increased by $213 per acre ($396 in 2012 - $183 in 2007).


Table 4. History of Cash Rents for Mid 1/3 of Cash Rent Leases

Land Quality

Year Excellent Good Average Fair ------------------ $ per acre ---------------------

2007 183 164 144 1202008 241 207 172 1382009 267 221 187 1552010 268 231 189 1562011 319 271 220 1832012 379 331 270 2182013 396 339 285 235

Cash rent increases between 2013 and 2012 were less than those between 2011 and 2012. For excellent quality farmland, rents increased $17 between 2013 and 2012 ($396 in 2013 - $379 in 2012), compared to a $60 increase between 2011 and 2012 ($379 in 2012 - $319 in 2011).

Leasing Arrangements Used in 2013Figure 1 shows lease arrangements used by farm managers. In Figure 1, the first three lease types relate to crop share leases in which the land owner and tenant share in the revenues and expenses from the farm. A traditional crop share lease has a simple sharing arrangement of revenue and direct expense, with a common split in

northern and central Illinois being 50 percent. In a crop share with supplemental rent arrangement, the land owner and tenant share in revenues and direct expenses, and the tenant pays an additional cash payment to the land owner. This additional cash payment often is called a supplemental rent. According to survey respondents, the supplement rent averaged $26 per acre in 2012. A share rent with other modifications arrangement is another type of share lease that modifies payments between the land owner and tenant. One typical modification is that the tenants pay all of the chemical costs. Share rent leases accounted for 43 percent of the leases in 2013, with

traditional crop share accounting for 16 percent of the leases, crop share with supplemental rents accounting for 13 percent of the leases, and crop share with supplemental accounting for 14 percent of the leases (see Figure 1).

There are two types of cash rent leases: traditional and variable. Under a traditional lease, a fixed amount of cash rent is negotiated between the land owner and tenant, typically at the beginning of the cropping year. Under a variable lease, the amount of the cash payment depends on revenue. A typical variable lease has a fixed base payment and then a “bonus” payment. The bonus payment is a percentage of gross revenue when gross revenue exceeds a specified level. In 2012, traditional crop share arrangements accounted for 31 percent of leases while variable cash leases had a 17 percent share of leases (see Figure 1). Farm managers typically use short lease terms on cash rental arrangements. Of cash rents, 86 percent had a one-year lease term, 5 percent had a two-year lease term, and 8 percent had a three-year lease term. Farm managers expect 65 percent of leases in 2013 to be renegotiated at a different price.

Custom farming is an arrangement in which the land owner pays a farmer to perform machinery-related operations on the farmland. The land owner then receives all revenue and pays all direct expenses from the farm. Custom farming accounted for 9 percent of leases.

Expectations for 2014Most of the respondents expect cash rents to remain the same in 2014 as in 2013. Sixty-nine percent expect rents to remain the same, 17 percent expect decreasing cash rents, and14 percent expect increasing cash rents.

Respondents were asked what would happen to 2014 rents if yields are normal and fall prices are near $5.00 per bushel for corn and $11 per bushel for soybeans. In this case, 40 percent of the respondents expect cash rents to decrease by more than $10 per acre, 30 percent expect decreases of less than $10 per acre, 27 percent expect rents to remain the same, and 3 percent expect rents to increase.

Variable Cash LeasesFarm managers were asked some of the terms of variable cash rental arrangement. Below are details associated with those arrangements: 1. For those arrangements that have bonuses, bonus

cash rents generally had minimum cash rents that were below the average cash rent for similar quality farmland: 15 percent indicated that the minimum cash rent was $100 below the average cash rent, 35 percent indicated it was $50 to $100 below the average cash






rent, and 45 percent indicated that the minimum was $0 to $50 below the average cash rent, and 5 percent indicated that the minimum cash rent was not below the average cash rent.

2. Costs of production entered in the calculation of the bonus on a small number of leases. Costs of production only entered into the calculation on 5 percent of the leases.

3. Bonuses generally were based on gross revenue. Eighty-nine percent of the leases were based on gross revenue. The remaining leases were divided between based-on-yield only and price-only.

4. For those leases using yields as the trigger, farm yields were used on 94 percent of the leases in calculating revenue. The remaining leases used county yields.

5. Price at a delivery point was used in 70 percent of the leases to determine the price used in gross revenue calculation. Future prices were used in 30 percent of the leases.

SummaryAgricultural returns have been above historical averages over the past several years. This has led to higher returns to owning farmland and higher cash rents. While above historical averages, agricultural returns have been volatile. This has led to traditional cash rents being of short duration and to increasing use of variable cash rent leasing arrangements.


The Illinois Society of Professional Farm Managers and Rural Appraisers provides one of the most thoroughly discussed summaries of the farmland market each year in this annual publication. The extensive data and in-depth experience of those working to build the publication provide a detailed description of the level of price, and conditions surrounding sales of farmland during the year in the state. Each year, members collect actual sales data, analyze and select representative data, and provide direct interpretation of conditions surrounding the sales. This year, a graphical representation of the past dozen installments is included in each region’s report to show the progression of sales in each of the areas through time and by class of soils.

The purpose of this article is to add some additional context related to those data by also documenting the turnover rates of farmland in Illinois, and by taking an even longer historic perspective of farmland values using Illinois Department of Revenue transfer declaration or “green sheet” data.

While we cannot add the depth of discussion to the historic data that the ISPFMRA participants do, we can extend the sample period and provide some meaningful measures of sales activity over a relatively long history. Taken together, these form a “moving picture” story of the farmland market in Illinois that helps explain how we got to today’s Illinois farmland market.

Farmland TurnoverThere have been several very notable land sales in Illinois and surrounding states setting new high per acre sales prices in many areas, and leading to increased interest by others in evaluating both potential sales and purchasing opportunities. In 2012, there again seemed to be a flurry of end-of-year farmland auctions and new listings of farm properties. Casual explanations of the turnover activity include elevated concern about tax and estate law changes, efforts to take advantage of market momentum, strong balance sheets and derived demand from recent high income years, and continuing strong investor demand.

However, others have suggested that 2012 was not at all abnormal because farmland market activity often peaks in the first and fourth quarters. Furthermore, even as some in the farmland market claim unprecedented farmland market activity, farmers and investors seeking additional land continue to cite thin market conditions; neighbor

The Illinois Farmland Market: Trends in Farmland Turnover and Values

Erik D. Hanson and Bruce J. Sherrick

bidding wars are noted as explanations of high sales prices; numerous reports occur of auctions that fail to meet reserve requirements; and there remains low interest by absentee owners in selling in the majority of cases.

Although land transfer records are publically available, it is difficult to determine how much Illinois farmland is sold each year due to difficulties in uniquely defining an arm’s length farmland sale without a great deal of additional specific information about the transaction. To address this issue, we first create a set of standardization screens that together represent an effort to represent legitimate farmland sales. Specifically, the data in the tabulations below limit potential “farm” sales to those with 10 or greater acres (eliminating many rural residence and lifestyle farms) and less than 1,281 acres (sales greater than two sections though notable, are quite rare and dominated by one-side public control).

To control representativeness, the data are also screened to exclude sales with price per acre values below $100 or above $20,000 to limit the influence of non-representative sales and development parcel influence as well. Data are further limited to sales not identified as “between related parties”, and further are restricted to those parcels designated as “farm” or “land/lot only” in the sale record. For the period from 2000 to 2011, these criteria were met by 80,702 parcel sales that accounted for 6.19 million acres of Illinois farmland. For context, there are approximately 26.75 million acres of land in farms in the state according to USDA.

Given the information above, total Illinois farmland turnover averaged only 1.9 percent per year of total land in

Figure 1. Annual Farmland Turnover, 2000-2011


farms from 2000 to 2011. However, this average is almost certainly an overstatement of actual farmland turnover because our screen for related-party transfers excluded only 18 percent of transferred acreage, well below the USDA’s estimate that 51 percent of farmland sales are not arms-length. It is possible that USDA overstates the fraction of transfers between related parties, and that IDOR screens do not fully capture all related sales information. If we use the USDA’s estimate of independence to further adjust the exclusion rate, the average annual turnover of farmland in arm’s length transfers would be just over 1 percent from 2000 to 2011, a figure that is consistent with Illinois’ pre-2000 history, screened by a different indicator of “arm’s length” status. Figure 1 shows these data graphically, highlighting a slight reduction in turnover through time (note: 2012 IDOR data are not yet available). The seasonality of sales is addressed by Figure 2, which indicates that recent fourth quarters have experienced relatively robust farmland sales. Although there has been a shift away from the first quarter and toward the fourth quarter of late, an established seasonal pattern is visible. Specifically, most farmland sales tend to occur rather early or late in a calendar year, leaving the middle of the year as a relatively slow time in farmland markets. The most recent years have resulted in a more pronounced version of this pattern.

Overall, it may be surprising how little farmland actually sells in any year and, as a result, how long holding periods are for most farmland owners. It is clear that the Illinois farmland market turns over very slowly and does display one of the characteristics of a “thin” market.

Farmland ValuesAs shown by the data in this year’s report, 2012 (represented by the darker segments in the charts in each section of the booklet) was a year of continued farmland price growth. Regions 1, 2, 3, 4, 5, and 6 all saw strong growth in “excellent” farmland prices, a trend that is meaningful because all of these regions had relatively

large samples of “excellent” tracts in 2012. Price drops for certain small regions or tract types can often be explained by small sample sizes in either 2012 or preceding years.

Examining sale prices through time, a few clear regional patterns emerge in the ISPFMRA data. First, Region 1 consistently records highest farmland prices partly due to developmental pressures in the Chicago area. However, relative to the rest of the state, the farmland market in Region 1 cooled in the second half of the sample period.

Second, regions in northern and central Illinois have also enjoyed fairly predictable growth.

Third, with the exception of Region 8, farmland prices south of Interstate 70 lag well behind the rest of the state.

Although regions 9 and 10 are relative hot spots for recreational sales, these transfers generally involve marginal agricultural land at prices below those for “fair” tracts. Finally, in numerous regions, the 2008 financial crisis registered a slightly lower growth rate, but thereafter farmland again grew at exceptionally rapid rates in many regions.

The recent dynamics in the farmland markets can be put into perspective by looking at summary measures from

a longer and more extensive IDOR dataset from 1979 to 2011. State averages for these data are displayed in Figure 3, along with the sales prices corresponding to the 25th and 75th percentile prices. For comparison’s sake, state average farmland prices obtained through ISPFMRA data are also displayed during the 2001 to 2011 period. Two elements of Figure 3 are particularly eye-catching. One is the period of farmland price decline and recovery in the wake of the 1980s farm crisis. Equally apparent is the rapid appreciation of farmland values during the past decade. As illustrated in the graphs in each, these storylines are also relevant on a regional level. Indeed, farmland values in eight regions averaged both 8 percent to 10 percent annual depreciation in the crisis period in the 1980s and 9 percent to 11 percent annual growth from 2003 to the present. Farmland

in urban-influenced regions 1 and 8 did not experience such drastic changes in value during these timeframes. Historically, farmland values in central and east-central Illinois (regions 4, 5, and 6) are very similar and relatively high. Likewise, farmland values in the western part of the state (regions 2, 3, and 7) are closely tied to one another. Finally, for each year from 1979 to 2011, farmland values in southern Illinois (regions 9 and 10) were 35 percent or more below the average in the remainder of the state. Compared to the state average data, the ISPFMRA data were apparently weighted more toward higher valued soils, particularly in the later parts of the sample period.

Figure 2. Quarterly Farmland Turnover, 2000-2011


Finally, it is interesting to ask whether farmland parcel sales have changed through time. Figure 4 below shows a slight upward trend in parcel size sold through time, though in a lumpy and irregular fashion.

Overall, strong farmland values in Illinois continue with little evidence of stark shifts in turnover rates and only a slight increase in parcel size through time. While the previous few years have had conditions favoring late-year sales, there is simply not a large enough shift of sales to explain other features of the land market, and not a notable change in turnover rates. Each region represents a unique combination of features and characteristics, and is sold with specific conditions at sale. The Illinois Farmland Values and Lease Trends publication continues to document these issues and inform those interested in Illinois farmland markets.

Figure 3. Farmland Values, 1979-2012

Figure 4. Average Farmland Sale Size, 1979-2011




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Is YOUR company not on the roster above? Should it be? For information about being a part of the 2014 Farmland Values and Lease Trends,

contact ISPFMRA at the address/numbers shown below. Be A Part Of It!!

Illinois Society of Professional Farm Managers and Rural Appraisers N78W14573 Appleton Ave., #287

Menomonee Falls, WI 53051Telephone - 262-253-6902

FAX - 262-253-6903 Email - [email protected]

www.ispfmra.org



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Documents

2013 Illinois Land Values and Lease Trends - ISPFMRA Farmland Values & lease Trends 1 2013 Illinois Land Values and Lease Trends Published by the Illinois Society of Professional Farm