BLOOMINGTON — Illinois farmland prices increased at double-digit percentage rates again last year, a report from the Illinois Society of Professional Farm Managers and Rural Appraisers said.
Land with excellent productivity went up in price by an average of 21 percent in 2012, according to the society's annual survey released Thursday. It was the third straight year of double-digit increases for that category of land.
Meanwhile, land with good, average or fair productivity fetched prices 16 percent to 17 percent higher than in 2011, the survey revealed.
"Land price increases in 2012 were comparable to 2011 increases, when all land classes had close to a 20 percent increase," said Gary Schnitkey, a University of Illinois agricultural economist who helped compile the data.
Those percentage increases were large by historical standards. Between 1970 and 2012, Illinois land prices increased by an average of 7 percent per year.
The rate has accelerated in recent years, with yearly increases between 2006 and 2012 averaging 12 percent.
Survey respondents look for smaller increases this year. Thirty-six percent said they expect prices to rise between 1 percent and 5 percent, while 11 percent said they look for prices to climb more than 5 percent.
Another 23 percent of respondents anticipate farmland prices to remain the same, while 9 percent predict price declines, Schnitkey said.
Statewide, farmland with excellent productivity sold for an average of $12,670 an acre at the end of 2012 — up from $10,510 an acre at the beginning of the year, said Dale Aupperle, general chairman for the society's annual report.
For the full year, the statewide average paid for land with excellent productivity was $11,400.
In District 5 — which includes Champaign, Vermilion, Ford, Iroquois, Douglas, Coles and Edgar counties — the average price paid for land with excellent productivity was $10,000.
Within that district, land with good productivity sold for an average of $8,100, while land with fair productivity fetched an average of $5,700.
But recent sales have produced eye-catching prices, including one auction in Champaign County last week that fetched a price of $15,375 an acre. That 173-acre tract was on Windsor Road, 2 miles east of Illinois 130.
Other recent sales produced prices of $15,800 an acre in Christian County, $14,550 an acre in McLean County and $14,500 an acre in Shelby County, the society reported.
Local farmers make up about 70 percent of the buyers, though some non-farm investors are also among the purchasers.
High commodity prices are among the factors driving up the price of farmland, Aupperle said.
He noted that last year's drought cut corn and soybean yields, sending corn prices into the $7- to $8-per-bushel range and soybean prices into the $15- to $18-per-bushel range.
Other factors affecting land prices include:
— Low interest rates that helped farmers save money on equipment, freeing up assets that can be used to bid for farmland.
— Farmland being perceived as a hedge against inflation.
Society members say land prices could be affected by a range of factors in years to come. Those factors include interest rates, the value of the dollar, alternative investments, weather and yields, commodity prices and crop insurance.
The results of the survey were released during the society's annual Land Values Conference in Bloomington.