Each year the Farm Credit Illinois (FCI) appraisal team evaluates the same 22 benchmark farms throughout its 60-county territory based on the land’s productive index (PI) rating, as calculated by the University of Illinois’ Bulletin 811. Based on individual PI ratings, farms are divided into four categories: 1A, 2B, 3C Central, and 3C South. The study compares July 1 values from year-to-year.

Farmland Average Values Remains Strong in 2024

According to Farm Credit Illinois’ annual benchmark study, farmland values in the central and southern 60 counties of Illinois increased for the sixth consecutive year. On average, the benchmarks were up 7.49%. This overall increase measured similarly to 2023 results.

As seen in Figure 1, land values had a dramatic run-up beginning in 2003, until peaking in 2014. The first decline in more than a decade began in 2015 and continued a slight decline through 2018. From that point, land values increased again for five consecutive years and set new highs in 2023.

Figure 1 

Figure 1: FCI’s average benchmark study results by land class on July 1, 2000-2024. Source: FCI 2024 farmland value benchmark study

Benchmark analysis revealed a statistically stable land market in 2019 with a change of +0.2%. Influenced by strong commodity prices beginning in fall of 2020, land values increased by 2.1% in 2020, 8.5% in 2021, a substantial 27.9% in 2022, and 8.1% in 2023.

The 2024 study reflected an average increase of 7.49% with 18 of 22 benchmark farms increasing in value.

Results across all land classes showed considerable variation, reinforcing that agricultural real estate is a location-specific asset. When considering the individual benchmark values, the average year-over-year percentage changes across the four land class categories (1A, 2B, 3C Central, and 3C Southern) ranged from +3.6% to +14.05%.

Table 1 illustrates the average changes in the four general land classifications. Class 1A and 2B benchmark farms are mostly located in northern Illinois, whereas the Class 3C farms are in both northern and southern Illinois. These farms are tracked separately based upon location. Benchmark farms are plotted and categorized by land class on the map in Figure 1.

 Table 1 

Table 1: Average percent change in overall value since 2022 by land class. Source: FCI 2024 farmland value benchmark study

Commodity Prices in Relation to Land Values

Commodity prices rose in the fall of 2020 and remained at strong levels through early 2023. This created strong income levels for most farmers. Prices began to decline in the second half of 2023 and are now at the lowest level since 2020. Net farm income for this current crop could negatively affect land values in the coming year. Figures 2 and 3 demonstrate the relationship between land values and corn and soybean prices.

Figure 2

Figure 3

Other Factors Affecting Land Values

Strong demand for Illinois farmland coupled with limited supply of farms for sale remain primary factors in land values. Buyers are a mix of operating and retired farmers, experienced farmland investors with ties to the area, and some outside investors.

Over the past several years, strong commodity prices paired with Market Facilitation Payments and coronavirus assistance programs from the federal government helped stabilize balance sheets, increase working capital, and create a more positive outlook in agriculture. However, current commodity prices are low in comparison to recent years.

Rising interest rates have not yet affected farmland values.

Crop conditions throughout the FCI territory remain stable. Illinois corn conditions reported by the USDA show 20% Excellent, 61% Good, 15% Fair, 3% Poor and 1% Very Poor. Soybeans are rated at 17% Excellent, 58% Good, 19% Fair, 4% Poor and 2% Very Poor. 

Cash Rental Trends

This year’s study showed cash rents have mostly stabilized after three years of increases. As illustrated in Table 2, average changes in the four land classes varied. In conducting the benchmark study, the rates used looked at the overall picture from the past year and looks forward into cash rents that will be negotiated this fall. As for next year, we could see a change in cash rents due to lower commodity prices and possible negative net farm income. Overall, cash rents remained stable.

Table 2

Table 2: Average percent change in overall cash rent since 2022 by land class. Source: FCI 2024 farmland value benchmark study

Summary

The 2024 benchmark update for the Farm Credit Illinois territory shows continued strength in the farmland market. Eighteen of the 22 benchmarks increased in value while four benchmark farms remained unchanged. The variability of increases in the FCI territory reinforce that agricultural land is a location specific asset.

The economic health of farmers and farm owners remains stable, but there are still pressures on farmers’ financial positions. Interest rates, higher cash rents over the past several years, and lower commodity prices this fall will be a challenge that could affect land values in the upcoming year.

Overall, an increase of 7.49% indicates a solid market throughout FCI’s 60-county territory. Values as of mid-2024 continue to be at an all-time high. This fall and winter will bring challenges to the market that warrant careful monitoring.