Central Illinois Farmland Prices Up Again in 2011

The cost of farmland in central Illinois increased by almost a third in 2011, land sales professionals say, continuing a trend of the past few years.

The average price of land in the 15 counties around Decatur rose from $8,000 an acre in 2010 to $10,500 last year, Dale Aupperle, president of the Heartland Ag Group in Decatur, told The Journal Star newspaper in Peoria (http://bit.ly/yyGV1Y ).

Continued high prices for corn and soybeans and investor demand are driving the trend, Aupperle said, one that he said doesn't represent a bubble ready to burst.

"There are people who didn't buy (farmland) in July 2010 when the average price was $7,000 an acre. They were shocked that it had gone up from $6,000 an acre the year before," he said. "Now (prime land) is selling for over $11,000. This is driven by investor demand, it's not a bubble."

University of Illinois farm economist Gary Schnitkey agrees that price increases aren't like those seen prior to farming's economic collapse in the 1980s.

"In the 1980s, when prices declined, you had high interest rates and high inflation," he said. "Interest rates are expected to remain low, and low levels tend to support land prices."

But Schnitkey thinks increases in both crop and farmland price will ease this year.