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Lower grain prices have been blamed for the increase in the value of Illinois farmland flattening. Observers are expecting lower prices continuing into the year ahead.

“Simply put, farmland earnings are important and have been the driver on prices paid for farmland over the past few years,” said Dale Aupperle of Heartland Ag Group in Forsyth. “Sharply lower grain prices have diminished earnings projections and put the brakes on the uptrend in farmland values.”

Aupperle is chair of the annual Land Values and Lease Trends project managed by the Illinois Society of Profressional Farm Managers and Rural Appraisers. Others involved with the group appear to agree with Aupperle's assessment. Crop insurance provided farmers with a substaintial amount of cash in 2012 and 2013, said Gary Schnitkey, a University of Illinois agricultural economist.

“Those funds are no longer coming in,” Schnitkey said. “Experts are forecasting farmland returns to drop by up to 20 percent.”

Local farmers remain the primary buyers of land, with up to 85 percent of the land offered for sale purchased by farm families and local investors, Aupperle said. He said non-local investors have shied away from the higher prices. All catergories of farmland have experienced minor drops in value, according to the group's report. Schnitkey said cash rents have stabilized as a result of the drop in commodity prices. Rents had been at highs in 2013, he said.

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“We could be facing more cash rent declines if commodity prices are low in the fall this year,” Schnitkey said.

As the year continues, Aupperle said a number of factors could influence the price of farmland.

“Each will play a role in land values,” he said.

The factors Aupperle noted include the influence of commodity prices, weather and yields, interest rates, net farm income, the value of the dollar, alternative investments, ethanol and long term inflation.

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