Regional observations in farmland values report

BLOOMINGTON, Ill. — Beyond a comprehensive look at farmland values, the Illinois Society of Professional Farm Managers and Rural Appraisers’ annual report also features other tidbits of interest in each Prairie State region.

Here are other notes of interest that were included in ISPFMRA’s annual farmland values and lease trends, many looking at renewable energy developments.

Region 1

Wind and solar options are all over the place, but many projects have not been developed. Most projects being built in northeast Illinois are small-scale solar farms.

Wind leasing continues and more areas are getting mailers for these programs. As far as new wind projects, not many have been developed yet.

The political landscape will likely influence these projects in the future. Many solar options are getting extended or not renewed as the approval process from the utility providers is taking longer than anticipated.

The local perspective around these projects is negative due to views being obscured or the potential for neighboring property value to decline.

Large rental rates are being offered, but landowners are encouraged to talk with their attorney before signing any solar contracts so the landowner is not negatively affected.

There is a good participation in Natural Resources Conservation Service programs in the region, especially in the southeast portion.

Environmental Quality Incentives Program and Conservation Stewardship Program funding saw payment increases as the cost of these projects increased.

In erodible land, Conservation Reserve Program acres have increased some, but the bigger shift has been in cover crop acres.

As people find out how to manage these systems, the cost savings and soil health benefits have started coming to light.

Region 2

There was a noticeable decline in real estate transactions compared to recent years in this northwest region. Projections for 2024 indicated a decrease in farm income.

The year began with higher interest rates and lower commodity prices, which put pressure on potential returns.

Despite dry conditions before and during harvest, which allowed for an efficient harvest season, the overall conditions were favorable enough to produce high yields for both corn and soybeans.

Only 10 farmland sales exceeded $16,000 per acre, 15 fewer than in 2023.

Region 3

There was a lot of activity from the standpoint of landowner contracts and companies trying to lease acres in western Illinois for wind development.

With developments taking several years to implement and begin construction, it is still tough to gauge how many projects will be approved for production. The number of solicitations for projects has increased significantly in the last two years.

From a landowner’s perspective in conversations, they seem to be more open to the idea of wind turbines than solar.

Since many still want the land to be farmed and have highly productive soils, wind turbines offer the better solution versus solar panels in terms of farmability.

There is a new wind development east of Macomb and west of Brimfield in Peoria and Stark counties, and solar companies continue widespread advertising, but no large-scale developments have begun.

Region 4

This north-central region holds a variety of soils, crops and location influences, which can lead to great ranges in value from one end to the other.

The southwestern portion of this region tends to be most influenced by the general agricultural economy and has continued to be very tightly held, which positively impacts farmland values in that area.

This area also contains abundant wind energy opportunities as some of the “best wind” at 50 to 80 meters high exists in this region of the state. While many projects are already in operation, there are new projects being explored in the region.

Solar projects are beginning to be developed in McLean and Livingston counties. With Midcontinent Independent System Operator adding energy capacity through this region, wind and solar projects will continue to be developed and explored.

There have been carbon sequestration leases recorded in eastern McLean County. These leases have come in 2023 and 2024, so there is not much known about how this will affect land values.

Region 5

While margins have been compressed, many eastern Illinois operators are still very aggressive at seeking out additional land to farm in 2025.

Farmers that expand their operation to bring a son or daughter back to the farm during the high-income years of 2021 and 2022 now need more acres as profit per acre has decline.

Landowners’ interest in soil health and regenerative farming practices has led of adjustments in lease terms on a case-by-case basis, often in some form of sharing of expenses such as cover crops or soil health analysis.

Federal support programs have historically been an important part of weathering financial downturns. Uncertainty abounds with the new administration’s rapid changes to existing programs, ag or otherwise.

Region 6

Central Illinois farmland continues to be the location for investors who want top-quality land in a strong area.

The higher interest rate environment, lower net farm incomes and potential trade wars are keeping a damper on overall sales prices and perspectives from farmers and investors.

Farmer buyers continue to be the majority of purchases. However, the investor presence remained very strong in 2024.

ADM’s carbon sequestration plan with Wolf Pipeline in eastern Macon County and western Piatt County has not affected land values and has had little change from last year.

The new wind farm in northern Piatt County is in the final stages of development and will enter the operation phase this year. Few, if any, farms have sold in this new development this past year.

Solar continues to be a top of discussion among landowners. Community solar projects are found in the region; however, there were not any meaningful solar activities in 2024.

Region 7

There were more erratic auction results and a slow shift back towards traditional listings in west-central Illinois. There were also more “no sales” in the last four months of 2024 than experienced any other time over the previous four years.

There are active wind farms in the area. Originally, they were viewed most favorable with some added value, but some now view them as negatives.

In the past, sales of land with wind turbines brought a premium from $500 to $1,500 per acre.

There is a mixed response to whether existing wind turbines had any impact on their decision to purchase with some buyers indicating “yes” and others indicating “no.”

The amount of solicitation from wind and solar companies remained incredibly strong in 2024. Despite the sheer number of inquiries, very few seem to get off the ground.

Region 8

Prior to the residential real estate collapse in 2008, tracts close to cities and rural subdivisions, or transitional tracts, were selling for three times the value of farmland in this southwest region.

Most areas have taken long to recover. Since then, excellent yields and grain prices have pitted farmers against developers for land, especially since developers have been hit by inflation and higher labor costs.

The St. Louis metropolitan area’s population provides a strong economic engine for the region’s economy and has a positive influence on land values, depending on location.

Menacing rains kept most growers out of the fields until mid-May. Corn was then planted in a hurry, followed by soybeans.

After all of the spring rain, hot temperatures arrived and caused a need for moisture. July rains in some areas were excessive, but they helped corn get through pollination.

Overall, corn yielded well while soybeans didn’t get enough late-summer rains and yields suffered as a result.

Region 9

The upward farmland price trend from the past three years has continued, but slowed in the southeast region.

Fair-productivity farmland experienced the largest year-over-year increase in Region 9 at 13.4% with most other land classes remaining steady to slightly increasing.

This region has experienced a continued increase in interest for wind and solar farm. A concern of local farmers is they may lose farmland to new projects, especially solar farms and, in turn, will need to replace those acres through new leases.

Also, if the landowner starts to receive the high rental rates when a project becomes operational, will that landowner then take those proceeds and buy more farmland?

While there have been a few solar projects completed, it is still too early to know what affects, if any, these solar projects have on the local land and rental market.

Region 10

Illinois’ southern region continued to show positive increases in farmland values especially for the more productive classes.

These increases in land values occurred despite higher interest rates, low farm incomes and commodity prices of 2023 and 2024 and continued low income and price projections for 2025. Good and average productivity land values experienced increases of over 10% or greater.

Most existing rents that have been in place with long-term relationships between tenant and landlord are less likely to change in 2025.

Leases between a new tenant and landlord are likely to be more competitive and result in higher rents, but these are few with land changing hands to new operators being in a range from minimal to 5%.

Specialty crops continue to offer a niche to some landlords for higher rents. Pumpkin crops still provide a small portion of leased acres in the northeastern area of Region 10.