URBANA — A 173-acre farm east of Urbana sold for $15,375 per acre Wednesday in a transaction that was billed as a new record for the area.
Murray Wise, chief executive officer for Champaign-based Murray Wise Associates, said that two farmers and an investor purchased the land, located 2 miles east of Illinois 130 on County Road 1400 N (Windsor Road), at an auction held Wednesday at the Holiday Inn in Urbana.
Carl Carter, a spokesman for Murray Wise, a national agricultural real estate marketing and auction company, declined to identify the three purchasers.
Wise said he believes the sale was a record for undeveloped farmland in Champaign County, and auction manager Joe Bubon said it was the first time he has seen farmland prices without development potential be sold for more the $15,000 per acre in Champaign County.
"The auction process is ideal for smaller farms, because it creates the interest and competition that ensure a competitive, current market price," Wise said.
While Champaign County Farm Bureau manager Brad Uken couldn't confirm the sale was the highest ever in Champaign County, he did say the purchase ranks "as one of the larger sales dollarwise we have seen in Champaign County."
Wise said the price of farmland in general has been increasing in recent years, citing a recent report by the Federal Reserve Bank of Chicago showing that the price of farmland has gone up 53 percent for the three-year period from 2010 to 2012.
"We have record net farm income, very aggressive U.S. agricultural exports and incredibly low interest rates," Wise said. "That's a combination that leads to higher land prices."
Uken said that four factors have been keys behind the rising prices of farmland:
— Interest rates on certificates of deposit at banks.
"The interest rates have been going down and have been low," Uken said. "Some investors realize they cannot get a really good return at the bank and look to farmland as an alternative."
— Interest rates offered for borrowing money.
"Those rates have been low as well, so there's more of an incentive to borrow money and invest it in farmland," Uken said.
— Stock market returns.
"Investments in the stock market had been pretty low until recently," Uken said. "While the stock market can be risky, investment in farmland has been steady and rising. It is a nice place for a person to park his or her money."
— Commodity prices.
"Commodity prices have been strong over the last several years, so the return on investments should be a little bit higher," Uken said.
Wise said that commodity prices will influence the price of farmland in the near future.
"There has been a trend for a considerable period of time for commodity prices to be a major factor driving the prices of farmland," Wise said.