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Farmland Value and Rental Rate Behavior in Illinois

Author

Listed:
  • Paulson, Nick
  • Schnitkey, Gary

Abstract

Both farmland values and rental rates have seen significant increases over the past few crop years. The increase in land values, in particular, has members of the agricultural and outside investment communities concerned over the potential for a significant decline in land values and the resulting impacts on the profitability and viability of farm operations. This uses data on land values, rental rates, crop revenues, and interest rates in Illinois from various sources to analyze historical relationships among these factors. The data suggest that current land values are supported by both commodity and interest rate market fundamentals. However, uncertainty over future commodity prices and interest rates results in a wide range for potential land values in both the short- and long-terms. Farm operators, landowners, professional farm managers, and investors need to be aware of and carefully consider these factors in valuation farmland and setting appropriate rental rates and contract designs.

Suggested Citation

  • Paulson, Nick & Schnitkey, Gary, 2014. "Farmland Value and Rental Rate Behavior in Illinois," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2014, pages 1-14.
    • Handle: RePEc:ags:jasfmr:197151
    DOI: 10.22004/ag.econ.197151
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    File URL: https://ageconsearch.umn.edu/record/197151/files/415-Paulson_reduced.pdf
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    References listed on IDEAS

    as
    1. Nicholas D. Paulson & Gary D. Schnitkey & Bruce J. Sherrick, 2010. "Rental arrangements and risk mitigation of crop insurance and marketing," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 70(3), pages 399-413, November.
    2. Paulson, Nicholar, 2012. "Revisiting Flexible Cash Leases," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2012, pages 1-13.
    3. Schnitkey, Gary, 2013. "Farmland Ownership and Rental Percentages in Illinois: A 2007 to 2012 Perspective," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 3, July.
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    Cited by:

    1. Douglas W. Allen & Allison Borchers, 2016. "Conservation Practices and the Growth of US Cash Rent Leases," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(2), pages 491-509, June.

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