Farmland prices soften in 2024

BOONE, Iowa — Prices paid for Prairie State farmland declined across all categories during the first half of 2024, according to Illinois Society of Professional Farm Managers and Rural Appraisers survey respondents.

ISPFMRA released its mid-year “snapshot” details during the Farm Progress Show on Aug. 28.

“Excellent and good-quality farmland experienced a 5% decline. Average and fair-quality farmland saw higher declines of 8% and 10%, respectively,” said ISPFMRA Land Values and Lease Trends Report Committee chair Luke Worrell, of Worrell Land Services in Jacksonville, Illinois.

Excellent-quality farmland averages over 220 bushels of corn per acre in a normal year with a soil productivity index of 133 or higher. Good-quality farmland averages 200 to 220 bushels per acre, with a soil productivity index of 117 to 132.

Average-quality farmland averages 180 to 200 bushels per acre with a soil productivity index of 100 to 116 and no irrigation. Fair-quality farmland averages below 180 bushels per acre and has a soil productivity index under 100.

Worrell added that the “snapshot” survey supplements the society’s more extensive year-end efforts which are reported annually at the Illinois Land Values Conference. The 2025 event will be held March 27 in Bloomington.

The survey, conducted by Gary Schnitkey, University of Illinois professor of farm management and ISPFMRA secretary/treasurer, during the mid two weeks of August, indicated lower commodity prices are the drivers behind the price declines.

Schnitkey reported that respondents expect sales of the 2024 crop to average $3.85 per bushel for corn and $10 per bushel for soybeans.

Survey participants expected continued lower prices for commodities for 2024 production compared to 2021, 2022 and 2023.

Transactions

“A smaller percentage of farmland transactions occurred through estate sales, with the other groups increasing,” Worrell said.

He explained that of sales in the first half of the year, 50% were estate sales, 16% were farmers and 15% were local investors.

“Farmers are still the predominant buyers making up 63% of that category. This was followed by 16% being local investors, 11% non-local investors and 9% were institutions,” he said.

Worrell also noted that more transactions are being done through listings rather than auctions and “55% surveyed expect more listings while 31% expect listings and auctions to be about the same. A minority of 14% expect more auctions.”

Looking Ahead

Most survey respondents expect declines in farmland prices during the second half of 2024.

Compared to the 2023 survey, respondents are more pessimistic about farmland prices: 89% expect price declines, while 11% expect farmland prices to remain the same.

Responses to specific categories are:

• 47% expect declines of more than 3%.

• 42% expect declines less than 3%.

• 11% expect farmland prices to be constant.

Cash Rents

Cash rents are expected to decline in 2025, according to survey respondents. The average decline across farm managers and land qualities is about $25 per acre.

“Cash rents increased from 2000 to 2023, remained stable in 2024 and are now likely to decrease into 2025,” Worrell said.

“Over time, society members have slowly increased their use of variable cash rental arrangements, so that 35% of the leases are now variable cash agreements. That increase is expected to continue.”

Respondents indicate the following use of alternative leases:

• 25% are share rent leases.

• 9% are modified share rent leases.

• 25% are cash rent leases.

• 35% are variable cash rent leases.

• 7% are custom farming.

Over time, variable cash rents have increased and share rent leases have declined.

Worrell added farm managers continue to see stability in farm lease type use going into 2025, but with a continuing trend to more variable cash leases and fewer share rent arrangements.